Section 278 costs: fees, bonds and commuted sums

The construction cost of a section 278 scheme is usually the smaller half of what you pay. Design, technical checking, road safety audits, supervision, a bond and commuted maintenance sums sit on top, and on a modest access improvement the non-construction element can rival the works themselves. Budget for the whole package at the layout stage, because by the time a highway authority issues its fee estimate the access arrangement is already drawn on a planning drawing you have submitted.

An agreement under section 278 of the Highways Act 1980 lets a developer pay for works in the existing public highway that the authority would not otherwise carry out. New streets intended for adoption go down the section 38 route instead, and plenty of schemes need both.

What a section 278 agreement covers

The agreement is a contract between the developer and the local highway authority, or National Highways where the strategic road network is affected. It records what will be built, to what standard, who builds it, who checks it, what security is given and what happens if the developer walks away.

Typical content includes the works drawings and specification, the fee schedule, the bond or other security, the insurance requirements, the commuted sums, the programme and the defects liability period. The authority's standing orders usually require the agreement to be completed before works start on site, and nothing in the highway can proceed until it is sealed.

The works themselves vary: a priority junction, a right-turn lane, a signalised junction, a footway crossing, a bus stop relocation, pedestrian refuges, a traffic regulation order to change parking restrictions. What matters for budgeting is that each of those triggers a different depth of checking.

Design, checking and supervision fees

Most authorities publish a fee scale, expressed as a percentage of the estimated works cost, and split it into a design check element and a supervision element. Some add a separate legal fee for drafting the agreement, and a separate charge for each round of drawing resubmission beyond the first.

Checking is where programmes slip. The authority reviews the drawings against its own standards and the Design Manual for Roads and Bridges where it applies, and a design that departs from standard needs a formal departure approval, which goes to a different desk and takes longer. Road safety audits add further stages: an audit at design, another at completion, and a response from the designer to each finding.

Supervision covers the authority's inspections during construction and the final handover inspection. It is charged whether or not the inspector attends often.

Commuted sums for future maintenance

A commuted sum is a capital payment that buys the authority out of a future maintenance liability. It appears where the developer wants something the authority would not have chosen: a block-paved footway instead of asphalt, a signalised crossing where none existed, specimen trees in the verge, a structure, uplighting, or a non-standard street lighting column.

Authorities calculate these on their own published basis, usually a whole-life figure over a stated design period. The number can be uncomfortable. A single set of traffic signals carries decades of energy, inspection and renewal costs, and an authority asked to adopt them will want that funded.

The practical response is a design conversation early. Where the planning benefit of the non-standard item is marginal, swapping to the authority's standard detail removes the commuted sum entirely.

Bonds and securities

The bond protects the authority if the developer becomes insolvent mid-works. It is normally set at the full estimated works cost with an uplift for inflation and for the authority's cost of procuring completion itself, and it is released in stages, often with a retained element through the defects period.

A bond is not a cost in the sense that the money is spent, but it is a cost in the sense that it consumes facility headroom and carries a bank or surety fee each year it stays live. On a phased scheme where the highway works are triggered by occupation of a later phase, the bond can sit live for years. Model it in the cash flow rather than treating it as a contingent item.

Why the construction cost is the smaller half

Add the heads above and the pattern becomes clear. On a scheme of a few hundred metres of footway and a junction tightening, the professional design, the audits, the authority's checking and supervision, the bond fee and any commuted sum can easily exceed the price of the kerbs and tarmac. Three further items catch developers out.

• Utility diversions, priced by each undertaker through the statutory estimate process, with lead times measured in months
• Traffic regulation orders, which require advertisement and consideration of objections and can be refused after you have paid
• Statutory undertaker apparatus discovered during the works, where the diversion was never priced at all

None of those is in the headline works figure quoted by a contractor.

Programme interaction with the planning condition

Highway works are normally secured by a Grampian condition, worded so that no development, or no occupation, takes place until the works have been agreed and in some cases completed. Occasionally the obligation sits in a section 106 agreement instead.

The sequencing problem is familiar. The condition stops work starting, the agreement cannot be sealed until technical approval is granted, technical approval needs a departure decision, and the departure decision needs a safety audit response. Four dependencies, each held by a different person. Start the technical approval process while the planning application is still being determined if the access arrangement is settled, and ask the highway authority for its current checking timescales in writing.

A Transport Assessment or Transport Statement submitted with the application should already describe the works in principle, and a Construction Traffic Management Plan will be asked for separately. Keep the access drawing in all three documents identical. Divergence between them is a reliable way to earn another checking round.

Budgeting before the layout is fixed

Work in this order.

1. Ask the highway authority for its published section 278 fee scale, bond policy and commuted sum basis, in writing, at pre-application stage.
2. Price the works from a measured drawing, not a sketch, and include traffic management during construction.
3. Add the authority's percentages to that figure, then add legal fees and audit costs as separate lines.
4. Obtain statutory estimates for utility diversions early, because they have the longest lead times and the widest spread.
5. Test whether any non-standard item is worth its commuted sum, and design it out if not.
6. Put the bond fee in the cash flow for the full period it will stay live.

Highway costs on small sites behave in much the same way as utility connections, and the same discipline of asking for the published scale before designing applies; there is a companion piece on water and drainage connection costs on a small site. Application fees themselves are a separate and much more predictable line, set out in the fee rules for full applications.

Figures in authority fee scales and bond policies are revised, commonly each April, so take the current published version rather than one from a previous scheme. For the cost of the planning documents themselves rather than the highway works, see PlanScope pricing.

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. PlanScope provides AI-assisted draft reports for planning applications. Reports should be reviewed before submission. We do not guarantee planning approval.