What Is FTE?
When working on the budget and personnel resources for a project, you’ll likely come across the term FTE.
What does FTE mean?
FTE stands for “full-time equivalent.” It refers to the number of hours worked by a single employee in a week. The annual FTE count is considered to be 2,080 hours, which breaks out into eight hours per day, five days a week. FTE is used to convert the hours worked by part-time employees into those worked by full-time employees. This is for ease of calculating the cost — in time, money and personnel — of the project, since it standardizes the measurements.
So if you have one employee who worked 50 hours, one employee who worked 10 hours, and one employee who worked 40 hours on a project in a given week, that adds up to 100 total hours that week; assuming a full-time employee works 40 hours per week, your FTE is 2.5.
The FTE calculation is used in project management — and resource management, specifically — when staffing decisions need to be made. For example, if you have a construction project that is estimated to require 500 hours of work, you can determine your personnel requirements using the following FTE equation: 8 hours x (number of full-time employees) x (number of days worked) = 500 hoursIf you go ahead and divide 500 by eight, this means the number of full-time employees needed to work full eight-hour days is 62.5:(number of full-time employees) x (number of days worked) = 500 hours/8 hours = 62.5
There are several ways to break down that 62.5, depending on your needs. You could choose to assign six full-time employees and one part-time employee to work on the project for 10 days. Or you could allocate work to 12 full-time and one part-time resource for five days. You can adjust and diversify the calculations based on the project’s scope and requirements, scaling up or down as necessary. The FTE calculation thereby helps you manage your resources more accurately.