**5. A Methodological Framework: Management and Economic–Financial Prefeasibility for the AR of Cultural Heritage**

To effectively support decisions for the AR of cultural heritage, a methodological framework based on the integration of different methodologies has been set up (Figure 1). In particular, the development of a Financial Feasibility Plan (FFP) for verifying the economic convenience and financial sustainability of the RD will be described in a more analytical way, in line with the provisions of the EU guide for the 2014 cost–benefit analysis [52].


**Figure 1.** Methodological framework.

As a pilot case, the village of Lorica (province of Cosenza) located in the Sila National Park (Italy) has been chosen because it offers a diverse territory, areas of high natural value, deep historical and cultural roots, and a strong tourist vocation compared to other provinces in Calabria. Hence, the choice of Lorica as a pilot case is particularly interesting for the initial application of more complex interventions, with high potential for the area, as they can attract a large number of hikers.

It is important to emphasize that the implementation of the methodology represents a real decision support system for more effective management of assets and the associated environmental and economic impacts, in favor of the local economy.

However, in the context of tourism development, the implementation of the proposed methodology is just the first step towards possible future applications. A future research objective is to build a comprehensive framework of the territory and classify the immense heritage of shelters in the park in a more detailed and transparent manner, making it easier for decision-makers to understand their strengths and weaknesses and decide how to orient management strategies at a central level for more balanced development.

The following subsections provide a brief description of the phases that constitute the proposed methodological framework.

#### *5.1. Decision Context Analysis*

Analyzing the decision-making context marks the initial stage of a methodological framework that assesses the managerial and economic financial prefeasibility of an RD project within the SNP. The process of recognizing cultural heritage values for the valorization of the AR project in the prefeasibility phase [13,24,26–28] is based on the integration of different cognitive approaches, including historical research, interviews with local experts in the field of conservation, and surveys on the field [17,21,24–28,34,35,42,45,46,50].

The evaluation process employs adaptive and synergistic approaches to assess the decision-making context. These approaches consider the unique characteristics of the study context, beginning with specific needs and examining potential conflicts. Rather than predetermined solutions, they emerge from the comparison of multiple interests, opportunities, and resources involved. By combining techniques like soft systems analysis and hard systems analysis [19], typical of systems thinking approaches [21], the evaluation unfolds as a learning process. It seeks to comprehend local specificities and the perspectives of various stakeholders [25,27,28], identified using the institutional analysis technique. This enables the identification of pertinent issues for decision-making. The development of intervention alternatives relies on informed knowledge, encompassing both expert and common knowledge. Moreover, it incorporates the "complex values" recognized and

shared by the community. The methodological structure of the evaluation process is thus contextualized, integrating relevant methods and tools in a multi-methodological approach.

The results of the application of the system thinking approach were organized in a SWOT matrix (strengths, weaknesses, opportunities, and threats), thus providing a starting point for the design of context-aware AR strategies [6,25,27,47,51].

#### *5.2. Definition and Study of Adaptive Reuse Alternatives*

The alternative intervention scenarios [13,25] were developed using the scenario buildings technique [26], which systematizes the potential and development drivers of the park for sustainable tourism and the promotion of traditional culture [5,18,27,31,32]. These scenarios were built by integrating the heritage value system and local development trajectories, in line with the SWOT analysis and the knowledge of the complex values recognized and shared by the community.

#### *5.3. Choose the Most Favorable Adaptive Reuse Alternative*

The multidimensional nature of choosing the most favorable adaptive reuse alternative option requires the use of Multi-Criteria Analysis (MCA) as the best methodology to support the evaluation of alternative scenarios [16,26,47]. The robustness of the results from the MCA was tested through a sensitivity analysis, while the degree of consensus on the most favorable alternative was evaluated through the implementation of a social multi-criteria approach [28–30].

#### *5.4. Evaluation of the Economic Financial Feasibility*

The financial analysis was based on the setting up and development of an economicfinancial model which makes it possible to correctly evaluate, based on the project data of the alternatives, the economic convenience and financial sustainability of a specific intervention for a private investor [53–55].

Economic convenience refers to the project's capacity to generate value and deliver a satisfactory return on the invested capital, meeting the expectations of private investors. Financial sustainability, on the other hand, pertains to the project's ability to generate cash flows that are adequate for repaying any loans obtained while also ensuring a suitable compensation for the private investors involved in the project's execution and management. On a methodological level, the process of setting up and elaborating the model developed according to the flow chart indicated in Figure 2, to which an iterative logic must be applied to take into account subsequent improvements and adjustments [53–55].

**Figure 2.** Financial Feasibility Plan (FFP) flow chart [56–58]. Source: data, evaluation, and estimates conducted by the authors up to 2023.

The objective was to develop, through the identification of the main economic and financial parameters typical of the investment project under consideration, an estimation for 2023 (revenue system, investments, management costs, etc.). The definition of revenue was based on a market analysis of similar activities in the national and local context and on real estate prices from the Osservatorio del Mercato Immobiliare (OMI) [56]. The assessment of investment costs [57] was based on the price lists for the public and private works currently used in the Calabria region as well as data provided in the DEI—Prezzi Tipologie Edilizie [58]. These costs were also validated by consulting local operators and construction companies. The management costs were determined by considering the costs typically incurred by operators in the local market.

The Financial Feasibility Plan (FFP) aim to preliminarily identify the following:


#### 5.4.1. Preparation of the Financial Feasibility Plan

The Financial Feasibility Plan (FFP) represents the moment of systematization of all the data and hypotheses concerning the reality examined (investment project). Its development through a system of interdependent accounts makes it possible to determine the economic feasibility of the initiative and the project's ability to repay the debt and remunerate the risk capital [53–55].

Based on the data collected and the results of the analyses conducted, the first part of this work was developed, which was connected to the operational management of the project based on the cash flow analysis [53]. In this first phase, the construction of the FFP made it possible to identify some items of particular importance for carrying out the subsequent assessments concerning the economic convenience of the project, including:


The analysis of the economic convenience linked to an investment can be set up by referring to different valuation methodologies. Among these, the most commonly used are those based on the calculation of specific indicators suitable for providing a summary judgment on the investment's ability to create value and generate adequate profitability. In this regard, it intends to refer to the criteria of the IRR (Internal Rate of Return) and the NPV (Net Present Value).

#### Evaluation Criterion Based on the NPV

The evaluation criterion based on the NPV represents the incremental wealth generated by the investment, expressed as if it were immediately available at the instant in which the evaluation is made. Analytically, it is determined as the algebraic sum of the operating cash flows expected from the implementation of the intervention, discounted at the rate corresponding to the estimated cost of invested capital.

A positive NPV essentially testifies to the project's ability to free up sufficient monetary flows to repay the initial costs, remunerate the capital employed in the operation, and possibly leave resources available for further destinations.

The general formula for calculating the NPV [53] can be expressed by Equation (1):

$$NVP = \sum\_{t=1}^{n} \frac{F\_t}{\left(1 + i\right)^t} = \sum\_{t=1}^{n} \frac{\left(R - \mathbb{C}\right)}{\left(1 + i\right)^t} \tag{1}$$

where:

Ft = Cash flows at time t (with t varying from 1 to n)

R = Revenues (rentals or sales)

C = investment and management costs

i = interest rate or discount rate, equivalent to the opportunity cost of capital

n = duration of the investment

The NPV criterion is an evaluation method that fully considers the three factors based on a correct judgment of economic convenience, including the integral series of expected differential cash flows, their temporal distribution, and the financial value of time.

In the specific case in the equation of the NPV, the cost of the invested capital "i" is calculated as the weighted average of the cost of its own capital and the cost of the debt capital (WACC—Weighted Average Cost of Capital) [53]. Therefore, Equation (1) can be written in the following form shown in Equation (2):

$$NVP = \sum\_{t=1}^{n} \frac{F\_t}{\left(1 + WACC\right)^t} \tag{2}$$

Evaluation Criterion Based on the IRR

The evaluation criterion based on the Internal Rate of Return (IRR) is defined as the discount rate for which an investment has an NPV equal to zero [53] at which the economic result of an operation is zero, as shown in Equation (3).

$$IRR = i \quad where \text{ : } NPV = 0 \tag{3}$$

The evaluation criterion in question provides for the comparison between the IRR calculated for the project and a threshold rate which, consistent with what was declared in relation to the NPV, will correspond to the estimated cost of the invested capital. Therefore, when an investment has an IRR return greater than the opportunity cost of capital, the project is economically sustainable [53–55].

Not all economically viable investments are financially feasible. The expression "financial sustainability" refers to the project's ability to generate a cash flow that is sufficient to guarantee the repayment of loans and adequate profitability for shareholders. This can be represented by the simple condition according to which the cumulative net cash flow, determined as the sum of the annual net cash flows, always assumes a positive value at a limit equal to zero for each period of analysis considered.

The financial sustainability of a project can also be expressed in terms of bankability, with reference to particular indicators capable of assessing the margin of safety with which the lenders can be guaranteed timely payment of the debt service.

There are two main coverage ratios considered:


Evaluation Criterion Based on the Debt Service Cover Ratio

The Debt Service Cover Ratio (DSCR) is a valuation criterion that compares the operating cash flow, including both the repayment of the principal amount and the interest. This ratio is calculated for each period within the envisioned time horizon of the loans. The

DSCR serves as a measure of the project's ability to generate sufficient cash flow to cover its debt obligations, considering both the capital share and the interest share.

The Debt Service Cover Ratio (DSCR) has a straightforward interpretation: a value equal to or exceeding one signifies that the investment generates ample resources to meet the debt repayments owed to the lenders. However, for the ratio to be considered acceptable, the minimum value should not be precisely equal to one. This is because the ability to distribute dividends to shareholders would be jeopardized until the entire debt is repaid. Furthermore, when calculating the DSCR in a forward-facing manner, it is reasonable to assume that lenders would require an appropriate margin of security.

However, there is no universal benchmark for debt coverage ratios. The acceptable limit is subject to negotiation and depends on factors such as the project risk, provided guarantees, and contractual strength. The specific level will vary based on the unique circumstances of each project and the parties involved in the agreement.
