What Is FTE? Wrike Project Management Guide

fte meaning

Particularly due to the development in the part-time sector, your staff planning will be more comprehensible and controllable with this ratio. Now that the benefits are understood, let’s move to the next part to understand which industries benefit the most from the FTE model. However, this cannot be done when your firm does not have a standardized procedure to track and measure these parameters. Anything is possible with the most powerful work management software at your fingertips. In this article, we’re going to break down the very concept of FTE and explain why it is so important in project management. Bear in mind that this is just the expected number of hours Olivia may work with a 0.7 FTE — she will likely use some of these hours for PTO.

  • To calculate the total FTE, add the number of FTEs worked by full-time employees (1 FTE for each full-time worker) to the part-time FTE you calculated in step five.
  • In this way, scheduling projects based on the FTE calculation allows for greater accuracy in workforce planning and the efficient allocation of resources.
  • A typical full-time schedule is 40 hours per week, 52 weeks per year, which totals 2,080 hours.
  • Based on the hourly charge-out rates of employees, you can go for cost-effective global resources and increase your profit margins.

Three of them work full-time (40 hours per week respectively) and the rest work 10 and 5 hours in total. If you want to calculate FTE salary, multiply the FTE figure by your full-time salary. So if you pay FT workers $40/hr, this equates to $83,200 (roughly 2,080 hours scheduled annually—make sure to subtract leave balances). Thus, whenever you are planning short-term projects, you should rely on an hour-based resource management model. If you are an accounting and consulting firm and cater to short-term, time-specific, billable projects, clocking hours is the ideal choice to calculate time spent by your consultants.

Calculating rates of your employees with Clockify

A full-time equivalent (FTE) — also known as a whole-time equivalent or WTE — represents the sum of all full-time hours employees work in a certain company. Along with counting the hours worked, FTEs show how many full-time employees a particular company employs within a fiscal year or needs to employ to carry out a project. Rather than hiring new employees, businesses can use FTE to deploy staff across various departments thereby keeping costs down. Depending on the type of work that is required, management can decide the number of full-time employees that are needed for a particular project and assign employees to those positions accordingly.

100% FTE can also be achieved in several other ways, for example, through two part-time employees (who each work 20 hours per week) or four employees who work 10 hours per week. There are some exceptions when calculating FTE for the purposes of the small business tax credit. One FTE equals 2,080 hours per year and the total number of employees is taken into account rather than the number of hours they have worked. https://www.bookstime.com/ Certain employees are not included in the calculation such as owners, partners, shareholders, family members or relatives, and seasonal workers who work fewer than 120 hours per year. This is particularly true for large organizations that employ a variety of full-time, part-time, and flexible staff. Next, add the total hours worked by full-time employees and the total part-time hours worked by part-time employees.

Calculating FTEs for Large Employers Under the ACA

The IRS taxpayer advocate service has created an estimator that can help with this calculation. When using FTE alongside other performance metrics, it can become easier to understand per-employee costs and output in a large organization. FTE has several different uses and several different calculation methods, depending on why you want to calculate it. It will help you plan your project work, set deadlines, and work out your budget. Within this method, the employee is credited with 40 hours for each week when payment was due (including PTO). Within this method, you add up all actual hours worked (including PTO).

fte meaning

It also helps you in deciding when you need to hire part-timers for short-term projects. By comparing full-time employee’s numbers between industry competitors a company can analyze its current status about staffing, this can lead to conclusions like whether the company is under-staffed or over-staffed. Under normal circumstances, a full-time employee works 8 hours a day for 5 days a week.

FTEs calculator for project managers

Consequently, the FTE for a part-time employee working 20 hours a week would be 0.5. As you can see from the example above, you can easily calculate how many full-time equivalent employees you need to hire to successfully complete a project. All you need to do is enter how many hours of work are required to complete the whole project (estimated time), and then how many hours a day your employees will work on that specific project.

  • At some companies and in some countries, a 36-hour work week is also a viable option so for them, 36 hours of work equal 100% or 1.0 FTE.
  • Meanwhile, a part-time or contract graphic designer at the same company works 22 hours per week.
  • To calculate Sarah’s FTE, we need to divide her hours worked (28) by the number of hours worked by full-time employees (40).
  • It can also be ambiguous when considering employees who don’t work fixed hours every week, such as hourly employees or freelancers contracted on a per-project basis.
  • If you want to calculate FTE salary, multiply the FTE figure by your full-time salary.
  • You are a project manager, and you are trying to make arrangements for an upcoming project.

To determine your eligibility for the small-business tax credit, you’ll need to use a different system for counting FTEs. First, count the total number of employees who worked at your company at any time during the year, both full-time and part-time. SAVIOM has over 20 years of experience helping multinational clients manage their resources efficiently and effectively. This https://www.bookstime.com/articles/full-time-equivalent Australian-based MNC has a global presence across 50 countries and has helped 100+ clients meet their specific business goals. Saviom also provides tools for project portfolio management, professional service automation, and workforce planning software. So, SAVIOM can help your business to establish an efficient system geared towards your specific business challenges.

How is FTE used in project management?

If you, for instance, choose the first method, enter all the actual hours worked (including PTO) and divide that number with 2,080 to get the final FTE. As evident, once you have the total number of hours per day, you’ll be able to pick whatever days/employees ratio you want to carry out the estimated workload. To calculate the FTE for all employees in your company, consider the full-time and part-time employees you employ. However, bear in mind that this only applies to positions that work 30 hours per week when assigned a 0.75 FTE position, i.e., the IRS minimum for a full-time definition. In contrast, non-exempt positions who typically work only 28 hours per week on a 0.75 FTE schedule do not qualify, even if the employer policy defines them as full-time.

What does FTE mean in work?

The calculation of full-time equivalent (FTE) is an employee's scheduled hours divided by the employer's hours for a full-time workweek. When an employer has a 40-hour workweek, employees who are scheduled to work 40 hours per week are 1.0 FTEs. Employees scheduled to work 20 hours per week are 0.5 FTEs.

With 14 employees, 7 of which are full-time and 7 part-time, the staffing capacity is 9.04 full-time employees per year. As you can see, the part-time employees are converted into the performance of a full-time employee. So the FTE is not the number of employees in a company, but the equivalent of a full-time employee. Because the number of employees says nothing about a company’s actual work performance. That said, there are limitations to this calculation method — for instance, employees may be unable to work more than 40 hours per week due to their company’s policies or other factors outside of the project itself.

It can also be ambiguous when considering employees who don’t work fixed hours every week, such as hourly employees or freelancers contracted on a per-project basis. In this case, you can use this calculation method as a general guide but should also consider the possible limitations. Seeing a value of FTE 100% means a single full-time employee or multiple part-time employees work those full-time hours. This calculation provides a convenient way to quantify how many theoretically “whole” full-time employees are on the company payroll, even if the majority of your workforce is actually part time. To help you determine if you are eligible for a small-employer healthcare tax credit, you need to count the number of employees employed in your company throughout the year. In the context of the Health Care Reform Act, the Affordable Health Care Act requires the calculations that determine whether a business is classified as owned by a large employer or a small business.

fte meaning

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