*2.5. The Nature of Costs*

Firstly, we suggest a distinction among different types of cost that private entities can sustain, with respect to the development of architectural heritage, essentially referable to two macro-categories [11]: Investment costs and management costs.

In fact, the enhancement of real estate requires a starting investment to make the asset working, including the masonry work and the structures fitting with the safety standards, and the equipment and the facilities for its fruition (Figure 2). With respect, the intrinsic characteristics, the condition of preservation and its future use, such investment may be more unbalanced towards the building works or, conversely, toward equipment and furniture [12,13].

**Figure 2.** Cost categories for building enhancement.

Once the starting investment is completed, the management phase begins, involving costs, including human resources, utilities, maintenance, depreciation and amortization, and other goods and services [14]. It is to point out that, to assess the economic sustainability of the projects, among the management costs, the depreciation of equipment and furniture and the provisions for extraordinary maintenance, are particularly significant: Following this ratio, the replacement of equipment and furniture and the asset usability over time, are ensured, thus, allowing the sustainability of the initiative.

Operating costs, in turn, can be divided into two categories: Fixed costs and variable costs. Moreover, fixed costs are not related to production volumes, as in the case of the variable costs. Some of

the items listed above are characterized by the presence of a fixed component and a variable, such as utilities or some kinds of human resources.

As seen above, the Human resources item, usually among those with higher incidence, changes significantly following with the different management models: In the case of for-profit activities, for instance, it represents one of the major fixed management costs.

In the case of for-profit subjects, the economic-financial balance occurred only with an adequate level of profit: For this reason, during financial sustainability tests, this item can also be treated as an operating cost and subtracted from revenues.

## **Part Second—The Economic Evaluation of Feasibility Projects**
