model for the ex-ante financial verification of the projects is proposed. The model starts from the logic

underlying the Break-Even Analysis (BEA) and modifies some of its starting hypotheses that in specific

situations are inconsistent with the real market mechanisms. In this sense, in the paper, the explanation of the

proposed innovative model hypotheses is carried out and the comparison with those ordinarily used in the BEA

is developed. In particular, the linearity of total revenues and total costs, including in the classic version of the

BEA, is not considered among the assumptions of the innovative model, and new parameters are defined. The

proposed model can represent an evaluation tool to support the decision-making processes for the private and

public operators’ investment choices, able to rapidly analyze the financial feasibility of the initiatives to be

implemented on the territory. The outputs obtained from the application of the assessment model can guide the

determination and the selection of the interventions to be developed and, integrated with more detailed

Urban regeneration mainly concerns three areas of

the cities, different in terms of building tissue, age,

and function: the historic centers, the abandoned

areas, and the suburbs. For the old town centers the

significant value of the historical heritage connected

to the importance of enhancing the local identity

determines the need to redevelop the existing

property asset, [1], [2]. For the disused public

increasingly crucial, [3], [4], [5]. Finally, for the

peripheral areas, the development of interventions

aimed at bridging the existing fractures in socio-

initiatives, in line with the sustainable development

goals, [8].

numerous government programs have been

promoted. These have been adopted with specific

laws and regulations establishing the subsidies

granted to local entities for the urban regeneration

interventions implementation. Among the first to be

developed, the urban redevelopment programs

(P.Ri.U.) - established by art. 2 of Law No.

private resources, to improve the urban quality and

the services and infrastructures supply in the

neighborhoods where they are absent or scarce, [9].

Furthermore, the Integrated Intervention Programs

(PRINT) - are introduced and defined in art. 16 of

Law No. 179/1992 – have contemplated not only the

recovery of urban areas in an overall decay state but

also the building and environmental redevelopment,

by focusing on collateral aspects (social, housing,

environmental, etc.) until such time neglected.

subsequently modified and integrated by the Decree

of 28 May 1999 – has introduced the Urban

Requalification and Territorial Sustainable

Development Plans (PRUSST), which are a specific

form of the PRINT, at a larger scale. They are

multifunctional and negotiated urban planning tools,

capable of integrating i) different types of

intervention, by pursuing the urban, environmental,

and social redevelopment and ii) the public and

private subjects’ financial resources, for the

significant strategy carried out by the Ministry of

addition, urban regeneration has played a central

role in the 2020 Budget Law (art. 1, paragraphs 42-

43, of Law No. 160/2019) through the allocation of

a total of 8.5 billion euros, for the period 2021-2034,

to the municipalities with a population over 15,000

inhabitants, which are not provincial capitals, and to

the provincial capitals or metropolitan city

headquarters, for the investments focused on the

reduction of the marginalization and social

degradation phenomena, as well as the improvement

paragraphs 437-444, of Law No. 160/2019), the

National Innovative Program for the Quality of

Living (PINQuA) has been defined among the

investment lines financed with the National

Recovery and Resilience Plan, to reduce housing

deprivation, with particular reference to the suburbs,

in line with the sustainable goals, following the

urban model of the smart, inclusive and sustainable

cities, [13]. Finally, the 2022 Budget Law (art. 1,

paragraphs 534-542, of Law No. 234/2021) has

marginalization and social degradation phenomena.

Italian context that are focused on the regeneration

and sustainable development of the territory require

the integration between actions for the built

environment redevelopment, the environmental

quality improvement, the employment promotion

and the social exclusion contrast. In this sense, the

active role of the cities is essential, by determining

the increasing need to involve public and private

need of activating public-private partnership

total costs, including in the classic version of the

BEA, are inconsistent with the real market

phenomena. In these cases, the implementation of

the BEA could lead to wrong results and/or

inconsistency with the real trends of the economic

parameters (revenues and costs).

The aim of the research concerns the explanation of

the developed model to highlight its potential, for

inclusion among the support evaluation models of

the private and public operator’s investment

private subjects.

The paper is articulated according to the following

sections: in the next section, the main hypotheses of

the classic version of the BEA and those assumed

for the model developed in the present research are

highlighted. Then, the theoretical model aspects are

illustrated and the main steps that constitute the

logical procedure to be implemented are described.

In the final section, the conclusions are introduced,

and further insights of the research are listed.

The proposed model borrows the logical approach

of the BEA, [18], [19], [20]. The identification of

the number of goods/surfaces to be sold to break

even the initiative (to achieve the balance sheet) and

the determination of the time required to recover the

initially invested capital are two crucial factors

within the economic-financial evaluation of an

investment project. In general terms, the BEA and

the variable pu is the slope of the revenue curve and

obtaining a greater line slope as the price increases);

iii) on the unit variable cost (with the same selling

price and fixed costs, the GFA that corresponds to

the break-even decreases proportionally to the

reduction of the unit variable cost: since this (Cvu) is

the variable cost line slope, the lower the Cv

amount, the lower the slope of the variable cost

line). In general terms, the classical version of the

BEA and the model developed in this research

implementing an a-temporal assessment, in which

all costs and revenues are assumed to be attributed

to the same time, i.e. the evaluation time

(assumption 2) in Table 1). This hypothesis

determines the exclusion of the discounting

operations of the economic parameters (costs and

revenues) which are, instead, fundamental for the

dynamic analyzes (Cost-Revenue Analysis CRA

and Cost-Benefit Analysis CBA). Although it

represents a simplifying hypothesis, it is consistent

absorption of the related GFA quantities by the real

estate market, i.e. at the reference evaluation time,

[22]. With reference to this simplification, it should

be highlighted that, although the building operations

concern a period of time constituted by different

years, the instantaneous analysis allows not to

assume the temporal distribution of costs, the

forecast of sales correlated to the greater or lowest

market dynamism, the choice of the discount rate.

Therefore, the BEA techniques and the proposed

hypotheses between the classical version of the

from the selling price. Conversely, for high-sold

GFA, the seller is willing to reduce the pu as the

amount of total revenue is associated with the larger

sold quantity.

phenomenon as a second-type price discrimination,

i.e. a business strategy carried out by the investors

mechanisms concerns the discount dynamics that

are established between the subjects involved in

these operations (purchase of raw materials,

realization of GFA and sale of GFA).

total cost, i.e. the sum of the Cf and Cv, is not

characterized by a linear trend, due to the non-linear

trend of the Cv because the Cvu is not constant but

decreasing. In this sense, the correlation between the

increase in the production amount and the decrease

the unit production cost and to use of the obtained

savings to increase profits or to compete on price.

perfectly linear relationship between the cost

amount and the production volumes, as a more

dynamic behavior is opposed to this static

representation of the cost curves. In theoretical

terms, the pecuniary economies of scale are those

from which the firm benefits when it manages to

pay lower costs for the production of the input in

used, as the output levels of a specific firm rise.

intervention, in Table 1 the hypotheses of the model

aimed at verifying the financial feasibility of an

investment are summarized and the main differences

in the assumptions with respect to the

microeconomics theory between the classical

version of the BEA are highlighted.

supply that can be absorbed by the local market at

lower unit prices compared to the current unit

market values for similar properties, is generated.

built by using the function reported below - Eq.(6) -,

which takes into account the unit market value of

the new units to be built in consideration of the

differential between the GFA quantities generated

by the investment and the limited ones given the

conditions of saturation of the current market

demand 󰇛  

i) the expense item that is independent of the unit

costs, the financial charges, and ii) the cost item

correlated to the selling price that represents the unit

out the intervention, set equal to a a  , with a

defined as the expected ordinarily profit margin, in

percentage terms, on the unit selling price. Thus, the

unit variable cost is the sum of the two components

as expressed in Eq.(7).

Ct = Cf + Cv and by replacing the economic

parameters included in the mathematical expression,

with the variables related to the variation rate (r),

the margin of ordinarily profit (a), the unit market

quantity of GFA (ql) and the unit variable cost

related to the expense items independent from the

unit selling price (Cv'u) the Eq.(8) is obtained:

determination of the GFA to be built capable of

ensuring the condition of minimum financial

existing urban planning tools and the ratio between

the number of existing buildings (current supply)

and the demographic trend (current and expected

demand), iii) the variation rate (r) taking into

account the average of the revaluation/devaluation

rates of the half-yearly quotations published by the

Observatory on the Real Estate Market of the

Revenue Agency for the analyzed urban area and

the intended use, [26].

estimated, by analyzing the expense items

characterized by a constant monetary amount, ii) the

unit variable cost (Cv'u) is assessed by considering

the expenses related to the quantities of built and

sold GFA, which vary proportionally to the floor

GFA quantity to be built and sold to achieve the

balance sheet of the operation for the private

investor, to verify the condition of minimum

financial feasibility, by assuming the

aforementioned economic parameters.

at identifying the "critical" variables of the model,

i.e. those whose variations significantly influence

the results of the financial plan.