In the realm of project and resource management, one term that frequently appears but remains shrouded in mystery is “FTE” – Full-Time Equivalent. Read on to learn what an FTE is, how to calculate it, and how it is different from headcount.
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What does FTE mean?
FTE stands for Full Time Equivalent. It’s a simple concept that causes a lot of confusion.
Let us start by explaining the difference between headcount and FTE.
- Headcount is a simple calculation of the total number of people employed by an organization.
- FTE (Full-Time Equivalent) is a calculation of the total working time of the people in an organization.
If you have a mix of full-time and part-time resources it can be hard to figure out how much work they can provide you. But by expressing the working hours of the resources as FTE we can easily quantify how much work they can do.
FTE example
Assume that in your organization a full-time person works 40 hours per week.
- Someone who works 40 hours per week will be 1 FTE
- Someone who works 20 hours per week will be 0.5 FTE.
Now assume you have two teams.
- One team has two people who work 40 hours per week each. This team consists of 2 FTE.
- The other team has one person who works 40 hours per week. It also has two people who work 20 hours per week each. This team is also 2 FTE.
- So in total, you have 4 FTE.
- Your headcount is 5 people.
How to calculate and work out FTE?
Assume in your organization a full-time person works 40 hours per week. And that you have a team of people with the following working patterns:
- 5 people who work 40 hours per week.
- 1 person who works 32 hours per week.
- 1 person who works 4 hours per week.
The team would have a size of 5.9 FTE.
How did we work this out? The math is quite simple.
First work out the total working hours for a week for all resources. So given the above, this is 5 people x 40 hours + 1 person x 32 hours + 1 person x 4 hours = 236 hours.
Then divide 236 / 40 (which is the working hours for a full-time person) giving 5.9 FTE.
And here are the calculations explained in detail.
- 40 hours / 40 hours = 1 FTE. We have 5 people with this working pattern, so 5 FTE.
- 32 hours / 40 hours = 0.8 FTE. We have 1 person with this working pattern so 0.8 FTE.
- 4 hours / 40 hours = 0.1 FTE. We have 1 person with this working pattern so 0.1 FTE.
- 5 FTE + 0.8 FTE + 0.1 FTE = 5.9 FTE.
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When to use headcount vs. FTE
If you are trying to understand the number of physical people, then use headcount. For example, if you are running a training course and need to know how many desks to provide you need to think in terms of headcount as each physical person will need a desk.
If you are trying to work out how many people you need for a project then you need to think in terms of FTE as what is important is the total amount of work the project team can provide and not how many individuals make up the project team.
When resource planning your teams or resource planning projects, FTE is more commonly used than headcount.
How to use FTE in Kelloo
When you assign work in Kelloo you can assign the work in either days or FTE.
This is useful because often when allocating work, people think in terms of how many people full-time people they need to do the job and not how many days will it take.
When we allocate work using FTE in Kelloo, Kelloo works out for us what this means in terms of days.
In the example below, we have Kelloo set up to mean 1 FTE = 5 days per week.
When we assign 2 FTE of the development team to the CRM project for 4 weeks, Kelloo allocates 40 days of work over 4 weeks.
The development team consists of a mix of people with different working patterns, but this does not matter to us. Assigning 2 FTE of the development team tells Kelloo to assign the amount of work that 2 full-time people could do over 4 weeks.
- 1 FTE = 5 days, so…
- 1 FTE for 4 weeks = 20 days, so…
- 2 FTE for 4 weeks = 40 days.
