Full Time Equivalent (FTE) – reality check

Intro

Full-time equivalent (FTE), or whole time equivalent (WTE), is a unit that indicates the workload of an employed person (or student) in a way that makes workloads or class loads comparable^[1] across various contexts. FTE is often used to measure a worker’s or student’s involvement in a project, or to track cost reductions in an organization. An FTE of 1.0 is equivalent to a full-time worker or student, while an FTE of 0.5 signals half of a full work or school load.

Source: https://en.wikipedia.org/wiki/Full-time_equivalent

The term “Full Time Equivalent (FTE)” is used widely in the IT-projects. In this post I want to perform some reality check on that term in regards to what it is and how it is misinterpreted during project staffing. As a conclusion I will present a solution to the misinterpretation dilemma.

Please consider this as my opinion based on my experience.

The subject – us

Before I can outline my view on the misinterpretation of FTE we have to talk about us, the human being that is supposed to be quantified by this term.
As Wikipedia outlines it, FTE relates to our time we spent for productivity at work. Yes, technically one could use it also to measure his/her free time but that would be out of scope here.

…FTE relates to our time we spent for productivity at work.

As you can see I slightly changed the statement from Wikipedia and added this part “for productivity”. Productivity is the part of our work, where we generate direct value for the company and/or the customer.
But there are “other tasks” we have to follow up upon, like reading emails, planning/attending meetings and don’t forget all the time we are disturbed by chats and calls from people around your company. That leads to additional wasted time you need on phase-in and phase-out of your work. While some of the “other tasks” may in some way generate value too, it is difficult to catch and quantify.

The big question is, if you would have to charge your customer for your productive work: How much % of your daily work could you charge honestly? 100%? 90%? Less?

Without making this too difficult you can directly see that probably not 100% of your time can be accounted for direct value. I presume you end up with a basic calculation of 80% productivity and 20% spent on “other tasks”. This number is obviously different for most individuals and/or jobs.

As we’ve learned above and most of you probably knew this before, we cannot…

• write working quality code
• deploy flawless infrastructure systems
• write HLDs/LLDs
• etc.

8 hours/day (based on a German 40 hour week/5 days). That said we also cannot do that on a 5 days/week basis. How long can you focus on a task in one go? 1 hour? 2 hours? more? I don’t think the regular (and in Germany by law) enforced lunch breach is enough to get your brain going.

Adding to this unrealistic thinking is the fact that we are constantly involved into our environment (work and private). As I mentioned above we constantly get chatted, called, emailed and so on. All during the focused quality time we want to spent on creating quality value for our company and/or customer.

The project staffing

So, as we’ve learned the business tries to quantify your workday/week/month/year by leveraging the term FTE. What we’ve also learned is that, due to many reasons, we are not as productive as someone may think.

Let’s put our self in the position of a project manager for a moment. He/She needs to plan how many FTEs are needed for which Work Package (WP) he/she has on his/her project plan.

Let’s assume these simple numbers:

The project is planned for 1 year.

WP 1: 2 FTEs needed
WP 2: 5 FTEs needed
WP 3: 0.5 FTEs needed

All of the above FTEs would be needed to complete the project in time, quality and budget.

I will not got down into details about project planning, Gantt diagrams, Agile methods, SCRUM or even SAFe. Let’s focus solely on these FTEs.

Most project managers I’ve met take an employee and account him/her for 1 FTE.

Based on my assumptions above you can directly see, that accounting 1 FTE as the real capability of us being able to provide quality value 100% of the time is totally unrealistic.
Obviously if we would go on with our little project plan we would either have to ask the customer for a project extension because we don’t get it done in time or we need to throw additional experts into the project, which will increase the costs. All, because of a wrong assumption.

…provide quality value 100% of the time is totally unrealistic.

The solution

The solution is actually quite simple from an high level perspective.

• Apply a realistic degree of “productivity” to different job types. Every job type needs different breaks to replenish his/her concentration/focus depending on the complexity of the task.
• Account for the effect of socializing. We are social beings – also at work. Even though it is very difficult to quantify its value, socializing is important and needs to be taken into consideration for the category of “other tasks” that don’t generate direct value.
• Create a matrix that reflects the aspect of “core profession”, which generates the direct value and categories for “other tasks”.
  • Such a list, if created by every individual, can help tracing down your time thief’s.
  • HR can use such lists to help individuals to improve on their daily time management or HR could check if another specialist is needed for a specific task.
  • Delivery teams can more specifically identify how many experts need to be placed on specific projects/run operation roles.

The overall impact by implementing the above advises are:

• Decreased project risk not meeting your time, quality and/or budget
• High potential happy customer
• High potential happy experts

A final message to all project managers out there.

Use the Pareto principle for the sake of simplicity until you have a professional productivity matrix in place.