**2. The Cooperation between Public and Private Subjects**

### *2.1. The Technical and Economic Feasibility Project*

The technical and economic feasibility project as a level of planning was introduced by the Code of public contracts (otherwise known as "Procurement Code"), as regulated by the Legislative Decree 18 April 2016 n. 50 e s.m.i. [3]. It replaces two design levels previously provided for by the legislation, the feasibility study and the preliminary project. Similar tools for verifying the feasibility of projects are also present in the legislation of many OECD countries, such as Canada, Germany and France.

The Article 23–Levels of the project for the procurements—establishes that planning for public works is organized, according to three levels of subsequent technical in-depth analysis: the technical and economic feasibility of the project, the final project, and the executive project.

The technical and economic feasibility project, according to the provisions of paragraph 5 of the art. 23, identifies, among several solutions, the one that presents the best balance between costs and benefits for the community, in relation to the specific needs to be met and the services to be provided.

### *2.2. The Public-Private Partnership*

The cooperation between public and private subjects to realize works and provide public utility services is an old matter. Even at the time of the ancient Roman Republic, it was a common practice to grant private citizens for the provision of public services and, often, for the achievement of works useful to the purpose of the allowance itself [4].

The current legislation on public works, in force as of March 2018, refers to Legislative Decree 18 April 2016 n. 50 "Codice dei contratti di appalto e di concessione delle amministrazioni aggiudicatrici e degli enti aggiudicatori aventi ad oggetto l'acquisizione di servizi, forniture, lavori e opere, nonchè i concorsi pubblici di progettazione", as amended by D. Lgs. 19 April 2017, n. 56.

Article n. 180 of the Code above mentioned regulates, the public–private partnership contract, as defined in art. n. 3: The agreement for pecuniary interest, stipulated in writing, with which one or more contracting stations, grant one or more economic operators, for a fixed period, depending on the duration of the amortization of the investment or the financing methods established, a complex of activities consisting in the realization, transformation, maintenance and operational management of a work, in exchange for its availability, or its economic exploitation, or the provision of a service that is connected to the use of the work itself, with risk-taking according to identified methods in the contract, by the operator.

According to the Department for Regional Affairs of the Presidency of the Council of Ministers, the enhancement of public real estate assets can represent an important opportunity to trigger urban regeneration processes and to promote local development: It must be approached as a logical consequence of the primary declination of an idea of city and territory, that must be well defined in the purposes of public decision makers. In this context, some arguments are hinged that describe administrative revolution, implemented in Italy with the entry into force of law no. 56 of 7 April 2014 (Delrio law) "Provisions on metropolitan cities, on Provinces, on unions and mergers of Municipalities". It means to consider city and territory, and the enhancement of public real estate assets as a conceptual "unicum". A coherent idea of the city will also be based on careful development of the public real estate and vice versa a good action of development is certainly part of a coherent idea of a city [5].

### *2.3. A Classification of Subjects' Nature, Activities and Costs*

As previously highlighted, Public Administration searches forms of PPPs with increasing frequency, to satisfy the needs of the local communities, while respecting the growing budget constraints.

The most important distinction, when considering involving private entities into partnership agreements with the Public Administration, is among the characteristics of the expected activities, not among the subjects (Table 1): There are, in fact, numerous cases of the subject with not-for-profit nature, but that carry out economic activities. In such cases, the cost structure between a not-for-profit or profit subject does not change, but the tax regime to which they are subordinate; in addition, of course, the prohibition for not-for-profit organizations to distribute profits [6–8].


**Table 1.** Nature of entities and of activities.

Each type of subject identified has different characteristics. In the case of public bodies, it is well known the firmness along with the management phase, due to procedural constraints imposed by the current legislation, which is often associated with the difficulties to acquire the necessary skills. The private for-profit entities normally are characterized by greater operational efficiency, which, however, must match an adequate return on investment, with the risk to overshadow the community's interests, which should be prominent in the case of public interest services management; furthermore, these subjects have a cost structure characterized by high fixed expenses for human resources. The not-for-profit organizations arise from determined values shared by the members: Usually, these subjects carry out volunteer activities without economic relevance, but they also have the opportunity to manage economic activities linked to their objectives. In organizational terms, they are characterized by an intermediate level of efficiency between public entities and private for-profit, due, on the one hand, by the absence of the procedural constraints typical of public bodies, on the other hand by the voluntary nature of members participation, when it comes without economic returns activities (Table 2) [9].


**Table 2.** Features of managing subjects.

Private entities involvement, with the purpose of cultural heritage enhancement, contributes to focus the attention on the economic dimension of these processes, since it entails the need for such subjects to maintain the financial feasibility of businesses and, in the case of for-profit activities, to ensure adequate levels of profit.

The purpose of this paper is precisely to verify the conditions that ensure the economic and financial balance in the enhancement processes in the public-private partnerships, in relation to managing entities with different nature, which are associated with different management models: For that aim, therefore, it is particularly important to understand how the cost structure changes if management models change too, while we can consider invariable the structure of revenues.

### *2.4. Kinds of Entities and of Activities*

Considering different kinds of activities and managing entities, we can suppose the three following models (Table 3):


**Table 3.** Managing models by type of subject.

The first model does not require an in-depth analysis: It responds to the classical model of business entities, for which the economic and financial balance occurs only if an adequate level of profit is ensured. Given the fixed costs for human resources that characterize it, this model is inapplicable where the business volume is not so significant as to generate substantial revenues.

In the not-for-profit model, the managing entity, carrying out not-for-profit activities, benefits from the volunteer commitment of the members and other parties at no charge except in certain cases, in addition to the reimbursement of any costs incurred. Another significant cost item for human resources, absent in this model, is the management, of the production aspects [10]. Thereby, the fixed cost of human resources is greatly reduced, sometimes transforming this type in variable cost (being occasional performances), significantly reducing the operating costs in the case of limited flows of users (Figure 1). It is a working model when a community considers a given asset particularly important, but its management does not generate sufficient revenues to cover the operating costs for the entity involved.

**Figure 1.** Trend of total costs by type of subject.

In the mixed model, however, the subject not-for-profit, carries on activities with significant revenues. In that case, it can be compared to a for-profit subject, in terms of cost structure, since the involved human resources have to be paid, as established by law, for those particular tasks. The main differences are: There is not profit, since any surplus is reinvested in the same activity and it cannot be distributed among members; the cost of the managerial duties can be considered, but is not a constant for the model.

It should be noted that the management model for the same asset can change over time. For example, in the start-up phase, a not-for-profit entity undertakes the management as a volunteer activity. Thereafter, if the demand increases adequately, it can turn the activity into business or acting as a start-up with entrepreneurial purposes.

In both cases, the management model choice does not depend exclusively on the economic and financial equilibrium: Even with adequate profits, it is essential to analyze the territory potential which can be positively exploited through the involved subjects, It may happen, for instance, the lack entrepreneurial stakeholders to manage a specific asset, or political interests may prevail, and that can act in favor of a particular model.

The economic and financial equilibrium assessment of physical asset management, however, allows the decision maker to make weighted choices, thereby reducing the possibility of failure, also bringing more clearness in the decision-making process.
