What is a Full-Time Equivalent FTE? Definition Meaning Example

fte meaning

As you can see, because the project only took 100 hours, you have one FTE left over. This tells you that, when allocating resources for future projects, you can reduce the number of FTEs by one and still have enough manpower to complete the project. You can calculate the FTEs required for the project by estimating how many hours each task will take and then adding them all up. FTE  refers to one full-time employee or the equivalent of a full-time employee.

Based on a 40-hour FT workweek, you’d need two full-time workers and one 0.5 FTE part-time employee. Add your team’s billable rates to forecast project costs, and track actual hours worked to monitor budget spend. FTE also allows companies to standardise salaries by showing what the equivalent salary would be of a part-time employee were they working full-time. A related term is pro-rata – part time employees are paid an annual salary pro rata, which means adjusted for their working hours. Unlike headcount, FTE takes into account the total number of full-time and part-time workers working at your firm.

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Full-time equivalent and hours-based resource models cater to different kinds of industries and projects. The blog has covered the usage and benefits of both models to help you make the right decision for your firm. FTE takes care of long-term projects, while hours are perfect for short-term tasks. Nowadays, companies are aligning towards the FTE model as opposed to the headcount for many reasons. For one, headcount does not take into account the number of part-timers in a firm. For two, it focuses on the overall organizational strategy and filling roles in general but does not drill down to closing the specific skill gaps.

Knowing your number of FTEs is important for assessing business performance, and it’s required under the Affordable Healthcare Act (ACA) and for certain tax credits. The method for calculating https://www.bookstime.com/ FTE is slightly different for each of these uses. As you can see, calculating FTE is essential for many reasons—from abiding by employment laws to accurately planning team resources.

FTE definition

It’s about assigning the best people to the task and putting them in a position to succeed (without wearing them thin). For instance, if a technician is required to provide technical support to a client, they can log the number of hours https://www.bookstime.com/articles/full-time-equivalent spent on it. This takes care of the bill and also lets you gauge the efficiency of each technician. So, when you implement this unified measure, you need to draw up a clear project plan in advance and allocate resources accordingly.

  • The same logic is applied if a company considers 30 hours per week as the standard for a full-time position.
  • 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.
  • This will help you act proactively and take corrective measures ahead of time.
  • Various combinations can be created depending on the needs of the business.
  • Any employee having at least 30 working hours per week (or 130 a month) is considered a full-time employee under this act.
  • Or you could allocate work to 12 full-time and one part-time resource for five days.

Besides this, clocking hours are good for evaluating performances of one-time activities. When resources log the exact number of hours they worked on a project, you can compare the booked hours vs. the actual time taken. This will help you act proactively and take corrective measures ahead of time. FTE tracking allows you to aggregate the capacity of role-based employees. For example, if you have 20 content writers with a capacity of 0.7 FTE each, then their aggregate is 14 FTE.

What is an FTE salary? How to calculate an FTE salary?

If so, confirm you’re offering the right level of health insurance to your team to prevent a tax penalty. Our team at Float employs a global remote workforce, with most working from home (or from a co-working space). We operate asynchronously, so everyone can choose which hours work best for them. Let’s review what FTE means, why it’s essential, and how to use it for resource management.

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