Section 278 works: bonds, fees and commuted sums
The works price is one line of four. Design checking, inspection, a bond uplifted above the contractor's figure and commuted sums all land on different triggers.
A section 278 agreement is the mechanism by which a developer pays for and carries out works to the existing public highway, and its cost is never just the cost of the works. Add the highway authority's design checking and technical approval fees, its inspection and supervision charges, a bond covering the value of the works, and commuted sums for maintaining anything non-standard you are leaving behind. On a modest access scheme those additions can be a substantial proportion of the construction figure, and they land at different points in the programme.
Budget them as four separate lines, because they are payable to different timetables and on different triggers.
What a section 278 agreement covers
Section 278 of the Highways Act 1980 allows a highway authority to enter into an agreement with a person who wants works carried out on the highway, on terms that the person pays for them. A new priority junction, a ghost island right turn, a signalised access, footway widening, a pedestrian refuge, a bus stop relocation, a traffic regulation order to move a speed limit: all section 278 territory.
It is distinct from section 38, which is about adopting new streets built inside a development, and from a section 184 vehicle crossing application, which covers a domestic dropped kerb. Schemes routinely need more than one, and each carries its own fees.
Where the access is onto a trunk road or motorway, the agreement is with National Highways rather than the local authority, and the process and standards are different again.
Design and technical approval fees
The authority charges for checking what you propose to build on its highway. Fees are usually published as a scale, commonly expressed as a percentage of the estimated construction cost, and they cover the technical review of drawings, structural approval where a structure is involved, the road safety audit process and the legal work on the agreement itself.
Look for four items in the published scale before you budget.
- The design check fee and whether it is charged per submission or per resubmission.
- Road safety audit fees, and whether stage 1 and stage 2 audits are charged separately.
- Legal fees for drafting the agreement, which sit alongside the technical fees rather than inside them.
- Traffic regulation order costs where the scheme changes speed limits, waiting restrictions or priorities, including advertising and the risk of objections extending the timetable.
The resubmission point deserves attention. Each round of comments costs money and time, and the cheapest route through technical approval is a first submission that matches the authority's own standard details rather than one that invites a conversation about departures.
Inspection and supervision
Once construction starts, the authority inspects. Supervision charges are typically a further percentage of the works value, and they pay for the inspector's time on site, the sign-off of each stage and the final certification.
Two practical points. Inspection availability is a programme risk on small schemes, because an inspector who cannot attend for a week stops the work rather than delaying paperwork. And works on the highway almost always need traffic management, which means a street works permit, lane closures charged by duration, and sometimes overrun charges if you exceed the booked window.
| Cost line | Typical trigger | Recoverable later |
|---|---|---|
| Design and technical approval | Before approval is issued | No |
| Legal fees | On completion of the agreement | No |
| Bond or cash surety | Before works start on the highway | Yes, on release |
| Inspection and supervision | Through construction | No |
| Commuted sums | Before adoption or certification | No |
Bonds and how the sum is set
The authority needs protection against the developer becoming insolvent halfway through rebuilding a junction. A surety bond, or a cash deposit in lieu, covers the authority's cost of completing the works itself.
The sum is normally based on the estimated cost of the works, uplifted for the authority's own procurement cost and for inflation over the expected construction period. That uplift is why the bond figure often looks higher than the contractor's price.
Bonds cost money to maintain, priced as an annual percentage by the surety, and the cost runs until release. Release comes at the end of the maintenance period, usually twelve months after the works are certified as complete, and only once any defects have been made good.
Two habits reduce the cost. Agree the works value with the authority rather than letting it estimate, and start the release process on the day the maintenance period ends instead of waiting for the surety's renewal notice to remind you.
Commuted sums for future maintenance
A commuted sum is a payment for the extra cost of maintaining an asset over its life, where that cost exceeds what the authority would otherwise carry.
The assets that attract them are predictable: traffic signals, street lighting beyond standard specification, block paving or other non-standard surfacing, structures such as retaining walls and culverts, drainage features including sustainable drainage components, street trees and landscaping within the highway, and sometimes bus infrastructure.
Authorities publish commuted sum policies with rates and the assumed design life for each asset type. Read the policy at design stage, because the cheapest way to reduce a commuted sum is to design in standard materials rather than to argue about the rate afterwards. A decorative block paved footway looks good on a visual and carries a maintenance liability for decades.
What changes during construction cost
Variations on the highway are expensive in a way that variations on your own site are not. A change needs re-approval, sometimes a further safety audit, and the traffic management has to be rebooked.
The usual causes are avoidable. Undiscovered statutory undertakers' apparatus, because a trial hole was not dug. Levels that do not tie in, because the topographical survey stopped at the site boundary. A drainage connection refused by the sewerage undertaker after the design was approved.
Spend money on ground truthing before technical approval. It is the highest return item in the whole budget, and the same logic applies to the unplanned costs in the cost of a planning condition you did not negotiate.
Building the cash flow
An illustrative sequence for a single access improvement, with no figures attached because they vary by authority.
- Planning permission granted with a condition requiring the highway works to be completed before occupation.
- Technical approval submission, with the design check fee paid up front.
- Road safety audit stage 1 and 2, with any designer responses.
- Agreement engrossed, legal fees paid, bond put in place.
- Street works permit and traffic management booked.
- Construction, with inspection charges drawn through.
- Commuted sums paid before certification.
- Twelve month maintenance period, then bond release.
The condition at step one is the reason none of this is optional. A Grampian style condition preventing occupation until the highway works are complete puts the entire agreement on the critical path to revenue, which is worth remembering when the temptation arises to leave the technical submission until the main contractor is appointed. Permissions with tight time limits make that worse, as set out in fees and charges when a permission is nearly expired.
This is general guidance, not legal advice. Check the position with your local planning authority or a qualified professional before relying on it, and use the authority's own published fee and commuted sum scales rather than figures quoted elsewhere.
See PlanScope pricing for the cost of drafting the transport and supporting documents that sit around a highway agreement. 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 paid for by a developer, such as a new junction or footway widening. Section 38 covers the adoption of new streets built within a development. Many schemes need both, and each carries its own fees, bond and commuted sum arrangements.
How is the bond amount calculated?
It is usually based on the estimated cost of the works, uplifted for the authority's own procurement costs and for inflation over the construction period. That is why the bond often exceeds the contractor's price. Agreeing the works value with the authority rather than accepting its estimate is the practical way to keep it proportionate.
When is a bond released?
At the end of the maintenance period, commonly twelve months after the works are certified complete, and only once defects have been made good. Bonds are priced as an annual percentage by the surety, so the cost runs until release. Start the release process as soon as the maintenance period ends.
What triggers a commuted sum?
Assets that cost the authority more to maintain than a standard adopted street: traffic signals, non-standard surfacing, structures, drainage features including sustainable drainage components, street trees and enhanced lighting. Authorities publish rates and assumed design lives, and designing in standard materials reduces the sum more reliably than negotiating the rate.
Can highway works start before the agreement is signed?
No. Works on the public highway without a completed agreement, bond and street works permit are unlawful and the authority can stop them. The sequence is technical approval, safety audit, agreement, bond, permit, then construction, and that sequence usually sits on the critical path to occupation.
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.