Highway agreement costs in a development budget
The works price is the easy part of a highway agreement. Technical approval fees, bond premiums, road safety audits and commuted sums are where appraisals fall short.
Highway agreement costs are where residential appraisals go wrong, and the reason is structural: the works are priced early from a sketch, the fees and sureties attached to them are priced late or not at all, and the gap sits in the appraisal as a single provisional sum. On a scheme of 20 to 100 units the fees, bonds, audits and commuted sums around a section 278 agreement can rival the construction cost of the works themselves.
Two agreements do the work. Section 278 of the Highways Act 1980 covers works to the existing public highway carried out at the developer's expense, such as a new access, a junction improvement or a footway. Section 38 covers the adoption of new roads within the site so they become publicly maintainable. Both are separate from any planning obligation under section 106, and both are negotiated with the highway authority rather than the planning department.
What a section 278 agreement covers
The agreement authorises works on land that is already public highway and sets out who designs, who builds, who checks and who pays. It is a contract, not a consent, and its terms are set by the authority.
Typical scope on a small residential scheme: the site access with visibility splays, a dropped kerb or bellmouth, footway reconstruction, drainage connections into the highway drainage system, street lighting alterations, road markings and signing, and any traffic regulation order needed to support the layout.
The trap is scope creep at technical approval. A junction shown on a planning drawing rarely survives detailed design unchanged, and each iteration adds design fees and time. Fixing the access geometry properly before the planning application, using the same standards the authority will apply later, is the best value money on the whole project.
Design, technical approval and audit fees
The authority charges for reviewing your design and for supervising the works. Fee scales are published and usually expressed as a percentage of the estimated works cost, with separate rates for checking and for inspection, and they are revised periodically. Take the current schedule from the authority rather than a figure from a previous scheme.
Budget these items as named lines:
- Design of the highway works by your own engineer, including revisions after each authority comment
- Technical approval or design check fee, as a percentage of works cost
- Site supervision and inspection fee, as a separate percentage
- Road safety audits at design and completion stages, plus the designer's response to each
- Any departure from standards submission, which takes time as well as fees
- Topographical and drainage survey work to support detailed design
- Legal fees for drafting and completing the agreement, yours and the authority's
Road safety audit responses are the line most often forgotten. The audit itself is modest, but a recommendation your designer disputes generates correspondence, and an accepted recommendation changes the design.
Bonds, sureties and how they are released
The authority will require security for the works, so that if you stop, it can finish them. That is usually a bond from a surety or bank, or a cash deposit, valued on the estimated cost of the works plus a margin for the authority's own costs.
| Element | What drives the figure | When it is released |
|---|---|---|
| Works bond | Estimated cost of the highway works plus a margin | On satisfactory completion, in stages in some agreements |
| Maintenance retention | Defects period after provisional certification | At the end of the defects period, commonly 12 months |
| Supervision fee | Percentage of works cost under the published scale | Paid up front or in stages, not refunded |
| Commuted sum | Non-standard items the authority will maintain | Not released, it is a payment |
The cost of a bond is a real cost, not a cash flow item. Premiums are charged on the bond value for its duration, and a bond that stays live through a defects period costs more than one released at completion. And the bond value is set on the authority's estimate rather than your contractor's price, which is frequently higher.
Section 38 adoption and commuted maintenance sums
Adoption converts a private estate road into a publicly maintainable highway. The authority takes on future maintenance, which is why it is particular about specification, and why anything outside its standard palette attracts a commuted sum.
Common commuted sum triggers are street trees, block paving or other non-standard surfacing, non-standard lighting columns, gully and drainage arrangements it would not normally adopt, and any sustainable drainage feature within the highway boundary. Each authority publishes its own approach, and the sums are calculated on a maintenance period that can run for decades.
There is a design decision here with a direct cost. A layout that wins design praise with a shared surface, feature paving and avenue trees can carry a commuted sum large enough to change the appraisal. Price the adoption consequences of the street design at the same time as the design, not after permission.
Land is the other section 38 issue. The land to be adopted has to be in your ownership or transferable to you, free of encumbrances, and a ransom strip discovered at legal stage stops the agreement.
Programme risk and network occupancy
Highway works cannot happen whenever your programme wants them to. Works on the highway are coordinated under the street works regime, and many authorities operate permit schemes with charges and defined occupancy windows under the Traffic Management Act 2004.
Expect constraints from seasonal embargoes around the winter shopping period, restrictions near schools at term times, coordination with utility works on the same street, and limits on how many streets in an area can be occupied at once. A traffic regulation order adds its own statutory process, with advertising, an objection period and the possibility that objections have to be reported to a committee.
The sequencing consequence is that the access works often have to come first, before the site can take deliveries, which puts them on the critical path. Our note on section 278 and section 38 costs on a small scheme works through the smaller end of this, and utility connection budgets for a single new dwelling covers the parallel statutory undertaker costs that usually arrive in the same month.
Provisional sums that should not be provisional
By the time you have a planning permission, most of these can be priced or at least bounded. Leaving them provisional is what turns a highway budget into a surprise.
- Technical approval and supervision fees, taken from the authority's current published scale against your engineer's works estimate
- Bond value and bond premium, quoted by a surety on the authority's estimate
- Road safety audit fees and the designer's response time
- Commuted sums for every non-standard adopted item, itemised against the layout
- Statutory undertaker diversions, priced from a formal quotation rather than an allowance
- Traffic regulation order costs, including advertising and the risk of a committee report
- Inflation on works that will be built two or three years after the estimate
The items that remain uncertain are the outcome of a departure from standards submission and the scale of any utility diversion found on site. Say that in the appraisal rather than burying it.
As an illustrative example, a 45 unit scheme with a new priority junction, 60 metres of footway reconstruction, a short section of adopted road with three street trees and a waiting restriction will carry, alongside the works price, a design check fee, a supervision fee, two audit stages, a bond with a premium running through a 12 month defects period, commuted sums for the trees, and a traffic regulation order process. Each is individually modest. Together they are a line item the appraisal has to show.
A Transport Assessment or statement sets the access strategy the agreement then delivers, and a Construction Traffic Management Plan usually has to align with the occupancy windows the authority will allow. Costs of drafting those documents are set out on the pricing page.
This is general guidance, not legal advice; check the position with your local planning authority, the highway authority or a qualified professional before relying on it. Fee scales and commuted sum rates are revised periodically, so take the current published schedule. PlanScope provides AI-assisted draft reports for planning applications. Reports should be reviewed before submission. We do not guarantee planning approval.
Frequently asked questions
What is the difference between section 278 and section 38?
Section 278 of the Highways Act 1980 covers works to the existing public highway funded by the developer, such as an access or junction improvement. Section 38 covers adoption of new roads inside the site so they become publicly maintainable. Both are agreements with the highway authority and are separate from a section 106 planning obligation.
How are technical approval and supervision fees calculated?
Most highway authorities publish a fee scale expressed as a percentage of the estimated cost of the works, with separate rates for checking the design and for supervising construction. The scales are revised periodically, so take the current published schedule and apply it to your engineer's estimate rather than reusing a figure from an earlier scheme.
Why does a bond cost money if it is refundable?
The bond value is security and is released, but the premium charged by the surety for providing it is a real cost for as long as the bond stays live. A bond running through a twelve month defects period costs more than one released at completion, and the value is usually set on the authority's estimate rather than your contractor's price.
What triggers a commuted maintenance sum?
Anything the highway authority will have to maintain that falls outside its standard specification: street trees, feature or block paving, non-standard lighting, unusual drainage arrangements and sustainable drainage features inside the highway boundary. Each authority publishes its own method, and the sums are calculated over a long maintenance period, so price them alongside the street design.
When do highway works have to happen?
Usually first, which puts them on the critical path because the site cannot take deliveries until the access exists. Timing is also constrained by street works coordination and permit schemes, seasonal embargoes, school term restrictions and other works on the same street, so confirm available occupancy windows before fixing the construction programme.
Sources and further reading
This article is general guidance about the planning system in England and, where stated, the rest of the UK. It is not legal or professional advice. Check your local planning authority’s validation requirements and take professional advice for your specific site.