What is FTE in Project Management?

When a company mainly has part-time employees, business owners can be keen to convert their total hours worked into an FTE basis to compare headcount needed between part-timers and full-time employees. Moreover, FTEs play a vital role in monitoring the salaries of part-time employees since they are generally paid less and do not receive the same benefits as full-time workers. FTE also allows companies to standardise salaries https://www.bookstime.com/ 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. Salaried employees who work full time or are expected to work a full-time schedule (even if they don’t report their actual hours each week) are considered full-time employees in both cases.

For example, say you run an ice cream van five hours per day, four days a week . An FTE 100% is a full-time employee, the one working 40-hour workweeks (also known as an FTE 1.0). To calculate FTE, find your employees’ total amount of working hours, divide it by 40 hours, and round up to two decimals. As you can see, calculating FTE is essential for many reasons—from abiding by employment laws to accurately planning team resources. It makes planning for projects and upcoming seasonal changes easier when you know how much capacity your team has. Calculating FTE even gives small businesses insight into whether they’re paying too little or too much in project costs.

Example 2: whole business

The calculated data is useful for benchmarking revenues or earnings per employee. The FTE count also plays a vital role in determining which positions — whether in a large corporation or a small business — should be full-time and which should only be part-time. There are 8 working hours in the day on Monday, and the DEF Company staff works 136 hours during that day. When 8 working hours are divided into 136 hours, the result is 17 FTEs.

• FocusLastly, BPO enables organizations to focus on their core business functions.
• If your total full-time hours are 30 per week, divide the number by 1,560.
• The “Trigger Amount” with respect to Extraordinary Trust Expenses for the Trust is $25,000 and the Maximum Reimbursable Amount is $100,000.
• Float does the heavy lifting by calculating your resources based on their total available hours .
• But if you pay monthly or semimonthly, you may have to divide the number of available work hours in the month by the number of hours the employee worked, on average, to calculate your actual FTE.
• You’re full time.” Not when some employees work 50 hours some weeks, and 30 other weeks.
• Bear in mind that these are just simple FTE example calculations — project managers approach FTE from a different angle while federal programs use different FTE calculation methods.

Various combinations can be created depending on the needs of the business. Full-time equivalent employees are people who work the entire workweek—eight hours per day, five days a week, totaling 2,800 hours per year. Several federal programs in the United States—such as the Paycheck Protection Program —use FTE fte meaning to determine employer eligibility. FTE is also used in the United States to determine whether an employer is an ALE for the fiscal year. Finally, small business owners in the United States need this metric to see if they can apply for a tax credit in the amount of 50% of the employer-paid health care premiums.

FTE salary calculator

This rate is known as the affordability threshold and is typically adjusted every year to account for changes in market conditions, healthcare premium growth, and the American economy. Employee’s total hours worked divided by the number of compensable hours in a full-time schedule during a fiscal year. How payroll is processedThe payroll process nowadays usually involves utilizing payroll software for more efficient and accurate handling. Yet, most small business owners still handle their payroll functions manually, especially when they are starting. Outsource Accelerator connects you with payroll firms that have extensive experience with the regulatory framework in the US and have a proven track record in accuracy and timeliness in payroll delivery. We make it easier for clients to learn about, and engage with payroll outsourcing. Outsourcing payroll servicesOne of the more popular outsourced functions is the payroll process.

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How to calculate FTE to determine the headcount needed for a project

In this example, let’s imagine that you are tasked with re-allocating resources within your department. A recent project took 20 hours less than anticipated, so you need to adjust your staffing levels accordingly. In this scenario, the FTE gives you a simpler way of calculating the number of employees you need to replace, rather than trying to calculate the total hours worked and then working out what percentage of that is full-time. In a nutshell, FTE is an acronym for full-time equivalent — a figure that reflects the number of full-time workers in your company. Before we delve into how to calculate it, there are a few important points to note. Whereas, employees that works 20 hours per week are considered 0.5 FTEs. 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.

30-Hour a Week Example – If full-time in your company is 30 hours, then every employee who works 30 hours a week or more is considered full time. Two workers working 15 hours weekly would be considered part time and their combined FTE would be one. This definition is the most commonly used to determine how many FTE you have for ACA purposes. Both Carole and Lynn in our example above would be full-time employees under this example. For example, if two part-time employees each work four hours per day for 10ten days apiece during a weekly pay period, their 40-hour combined total represents 1.0one FTE on the company’s payroll for that pay period.

If you’re worried about salaries and benefits, you can use FTE calculations to learn what you’re currently paying those working full-time hours. Reimbursable Costs means expenses incurred by the employee in the course of engaging in the planned learning activity and include registration, tuition and examination fees as well as textbooks/discs and applicable taxes. They may also include reasonable, incremental meal, accommodation and travel expenses. If a company bills clients, or pays out overtime, identifying teammates’ full-time equivalency helps identify and track organizational costs.

This is because the purpose of an FTE is not to see how many employees you have, but rather to measure the amount of work that’s being done. In other words, it allows you to compare different types of staffing arrangements on a level playing field. Full Time Equipment is based on the total number of hours worked, and not the number of people employed by an organization. Within this method, the employee is credited with 40 hours for each week when payment was due .

Additional FTE Frequently Asked Questions (FAQs)

If you’re calculating FTE for a different purpose and consider 40 hours to be full time in your organization, you can use that as your criteria. 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.

• And, the actual number of hours attached to a FTE will also depend on your organization’s policy.
• If an organization considers full-time to be a 40-hour working week then one full-time employee will count as 100% FTE.
• In order to get the project underway, you need to know how many hours it will take, and therefore how many people you will need.
• 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.

Because of the importance of having an efficient payroll, companies that can afford to do so tend to outsource it to dedicated professionals. A full-time employee is also privileged with statutory benefits that are provided by the employer. Since outsourcing companies hire and produce experts in the field, clients can assure better results in their operations – whether in customer service, accounting, or marketing. Their staffs are trained to ensure that their clients achieve the outcome they expect. Companies that outsource some of their business processes use their time on core services and competencies. Business Process Outsourcing is the delegation of business processes to an external service provider to a nearby or farther location.

A Covered Expense is deemed to be incurred on the date such treatment, service or supply, that gave rise to the expense or the charge, was rendered or obtained. Legal Costs of a person means legal costs incurred by that person in defending an action for a Liability of that person. POCKET EXPENSES The fees set forth above shall be in addition to the payment of out-of-pocket expenses, as provided for in Section 4 of this Agreement. No, people who own the organization or company cannot be counted in the FTE and average annual wage calculation. The Outsource Accelerator website has over 5,000 articles, 350+ podcast episodes, and a comprehensive directory with 3,000+ BPO companies… all designed to make it easier for clients to learn about – and engage with – outsourcing. Make necessary connections and keep recordsBe sure to keep records for salaries in different pay periods through copies of payslips and payroll records. Make any changes and corrections to employee salaries in case of discrepancies and inaccuracies in their pay.