The Complete Guide to Calculating Full-Time Equivalent FTE Hours

how to calculate fte

Things can get tricky if you have offices in countries that define and regulate full-time employees differently. Imagine that you need to estimate the amount of work in a new project or project phase. Estimating the specific number of hours your employees will need to complete the project in the long term is difficult. This is a typical way IT body leasing or consulting companies settle.

Save time calculating FTE

As would four part-time employees who each work 10-hours per week, totaling 40 hours. You can calculate FTE to determine how much a project fte meaning will cost in terms of time and personnel needs. If you’re still feeling confused, keeping track of employees’ time is kind of our thing.

What is Full Time Equivalent?

Calculate the FTEs by determining the number of hours worked by full-time or part-time employees in a year. To do this, multiply the number of weeks in a year with the number of hours for a full-time position. Understanding FTE is like having a magic wand for managing your workforce in business and HR. Instead of just counting heads, FTE lets you see the real impact of your team’s hours which can be easily calculated and tracked automatically by a time tracking software. The calculation of full-time equivalent (FTE) is an employee’s scheduled hours divided by the employer’s hours for a full-time workweek.

  • Full-time equivalent is a measure that shows how many full-time equivalent employees a certain company employs.
  • Calculating FTE can be a demanding, time-consuming task without the right tools.
  • Whether you hire employees as part time or full time depends on your business needs and local regulations.
  • There are numerous reasons why calculating FTE can prove meaningful to your company.
  • Calculate the FTEs by determining the number of hours worked by full-time or part-time employees in a year.

Full Time Equivalent (FTE)

  • Later, she joined “Desklog,” an automated time-tracking software, as a project consultant.
  • If you fail to give the full-time equivalent proper attention, you’ll end up not knowing how many man-days you can sell, or how many specialists you have available, and in which technologies.
  • You’re able to establish all of your personnel requirements by calculating FTE.
  • The SBA defines FTE employees as workers who work 30 hours a week or more.

If you’re not sure where to start to track FTE, consider using QuickBooks Time , which helps organize employee hours and delivers helpful insights into your FTE calculation. With these tips, you can run a smoother business operation with a deeper level of understanding into your labor costs and needs now and in the future. FTE refers to calculating the number of hours instead of the number of employees to forecast costs based on a full-time workweek. A full-time employee can be defined by a 40-hour workweek, 8-hours per day, 5 days per week. Once you have a list of employees, you’ll need to determine how many hours each employee works each week.

  • Calculating Full-Time Equivalents (FTE) is a crucial task for organizations to determine the number of full-time employees required based on the total work hours.
  • To get a good estimate, it’s best to average hours over a 90- or 120-day timeframe.
  • 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.
  • Multiply the total hours worked in a week by 52, the number of weeks in a year, to find the number of hours worked annually.
  • This employee list should include both the employee name and number of hours worked.
  • For example, let’s say a company considers 40 hours per week as full-time employment.

Such technology is already a part of many workplaces and will continue to shape the labor market and HR. Here’s how employers and employees can successfully manage generative AI and other AI-powered systems. It calculates FTE based on the percentage of hours worked relative to full-time hours. Proportional FTE calculation is used when employees work part-time or have variable work hours. Clockify is a time tracker and timesheet app that lets you track work hours across projects.

  • In our example, Jimmy and Marta would be considered part-time employees.
  • Companies use FTEs to figure out how much work their employees do.
  • Once all employee hours are accounted for, you can complete this step by adding all the hours worked for the week.
  • These regulations include shared responsibility provisions and tax reporting requirements like issuing Form 1095-C when necessary.
  • Be sure to detail the exact schedule or number of hours part-time employees worked, as this may vary from one part-time worker to another.

They’re also generally employed on a permanent basis as opposed to seasonal or temporary. Full-time workers are also typically entitled to benefits like medical or vacation pay. When you calculate FTE, you can find the costs of time, personnel, and money to determine staffing decisions. It’s used by businesses to figure out how many full-time or part-time employees are in a company and for organizing projects. It’s an important element to accounting to determine employee wages, hours of service, and your company’s expenses. FTE is a method of calculation to use when you want to accurately forecast specific needs of your business.

how to calculate fte

Step 4. Add annual hours worked for full-time employees and part-time employees

how to calculate fte

All the above-mentioned factors end up costing the company something and affecting its bottom line. You can also use an FTE calculation to determine the appropriate pay for part-time workers. To identify the FTE for a specific part-time position, just divide the number of hours worked by the employee by the number of hours considered for a full-time worker. Next, add the total hours worked by full-time employees and the total part-time hours worked by part-time employees.

FTEs calculator for project managers

Step 3: Calculate employee hours worked for the month

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