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Due to maintenance, some of our online forms and systems will be unavailable from 6:00am on Saturday 30 March to 7:00am on Monday 1 April. We are sorry for any inconvenience. To find out more about the section 114 notice, visit our section 114 page

Performance bond and commuted sum

Performance bond

A performance bond protects the council against the risk of unforeseen expenditure if the works are not completed by the developer.

An s38 or s278 agreement is supported by a bond or cash deposit (default cost/performance bond) based on 110% of the cost of the highway works (including utility works).

This can be called upon if the developer goes into liquidation or otherwise fails to complete the work for which they are responsible.

A performance bond may be in the form of:

Commuted sum

A commuted sum covers the maintenance and renewal costs (for 30 years) of things built by the developer as part of an s278 or s38 agreement and then adopted into public ownership by the council.

The Highways Act 1980 gives powers for councils to request a commuted sum payment to meet maintenance and renewal costs for a 30 year period.

The commuted sum covers assets outside the council’s normal maintenance programme, such as; structures, traffic signals, materials, street furniture, lighting columns, landscaping and trees.

The agreement will include conditions requiring the payment of a commuted sum where applicable and specify when the payment will need to be made. Recalculation of the estimated sum stated in the agreement will be necessary to arrive at the actual commuted sum payable when the design is built.

This will be based on the final infrastructure design, the actual quantities and the latest costs for maintenance operations at that time and may vary from the initial estimate.

In some cases, even if a commuted sum is offered by the developer, the council may choose not to adopt the assets into public ownership. Reasons for this may include:

  • safety concerns
  • structures we would not be able to maintain properly (e.g. street art)
  • materials we cannot maintain

Page last updated: 22 February 2024

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