Local place directors have issued new guidance on charging developers for future asset maintenance under the commuted sums system, designed to create a transparent and flexible template based on whole-life costings.

The latest guidance from ADEPT sets out the methodology and procedures for agreeing on commuted sum payments – a capital sum paid to the highway authority (or other body) as a contribution to future maintenance of assets to be adopted or transferred.

Typical issues to be considered in the whole-life costing approach to commuted sums are:

  • Hierarchy, network type and location.
  • Specification and materials.
  • Maintenance practices.
  • Frequencies of intervention.
  • Life span and therefore time to replacement

ADEPT said it was essential that the money is 'ring-fenced exclusively for the maintenance of the highway network' and 'preferably allocated to the specific asset categories'.

It adds that the protocol should allow annual out-turn reports to help ensure the correct funds are transferred to the respective maintenance budgets for future years.

'Any commuted sums monies should be treated by the highway authority as additional to any considerations in respect of normal maintenance budget allocations for the year,' the document states.

It also advises that setting clear standards for asset design and maintenance, as part of an asset management plan, 'will ensure that the mechanism for deciding upon eligible commuted sums is readily available and auditable'. 

Highways commuted sums broadly fall into two categories.

Section 38 (6) of the Highways Act 1980, states a local highway authority can agree a payment with developers related to new assets, while Section 278 of the Act relates to alterations and additions made to existing highway assets.

Other key principles included:

  • Commuted sums should be calculated over 120 years for assets integral to the integrity of the highway (eg for bridges and other structures) and over 60 years for other assets.
  • There should not be any requirement to calculate any degree of benefit to the local authority regarding commuted sums for S278 works, even where such works are considered to provide some benefit to the general public (e.g. an improved junction layout with enhanced pedestrian facilities being provided).
  • Under S278, commuted sums are not applicable to additional works which are merely for aesthetic rather than for design reasons.
  • There should be a dispute resolution mechanism to cover developer liquidation or a significant increase in the final commuted sum compared to the provisional one or some other circumstance.
  • In the case of specialist landscaping materials (such as setts), lighting columns or signs etc, where finding replacements in future years could prove to be difficult, an option could be for the LHA to request a stockpile of material and adjust the commuted sum accordingly.
  • Where possible, commuted sums should be calculated immediately before the highway asset infrastructure is adopted, based on provisional commuted sums agreed at the S38 or S278 agreement stage.
  • The agreement should contain a provision for recalculating the provisional commuted sums based on actual quantities, revised time periods to maintenance operations and a price fluctuation factor should be used to adjust costs and maintenance operations specified in the agreement.
  • The commuted sum should be payable immediately before formal adoption.

Mark Stevens, chair of the ADEPT engineering board, told Highways the overarching guidance of the ADEPT Engineering Board 'will hopefully help steer local authority highway engineers and developers to a more collaborative approach from the first thoughts on the impact of new land development'.

'With the already immense pressure on highway maintenance revenue budgets, the use of commuted sums is arguably even more necessary now than it was 15 years ago.'

In 2019, Highways exclusively revealed that councils had started charging commuted sums on their own schemes in a bid to provide a future revenue source to maintain capital projects.

Mr Stevens added: ‘One can foresee that the tendency for local authorities to use capital funding allocations (even internally-generated) to create a dedicated commuted sum revenue stream for the future will grow in its application.'