I assume that 'circular permutation' means placing the numbers on a circle in an arbitrary order? In particular, if you were to label the numbers as $a_1, \ldots, a_{36}$, we're allowed to consider the sum $a_{35} + a_{36} + a_{1} + a_{2} + a_{3}$, right? I will work with this assumption.
You have the correct idea. You want to take an average and argue that the maximum is at least as large as the average. The trick that I present here only works because of the specific numbers in question. We will pick a special set to average over, so as to get a larger average.
Ignore the number 1 on the circle, and you are left with 35 consecutive numbers. Group them into 7 consecutive intervals of 5. These have a total sum of $\frac{36 \times 37}{2} - 1 = 665$, and thus have an average value of $\frac{665}{7} = 95$. There you go!
This bounding was so convenient because $5$ is a factor of $36-1$. Otherwise, you don't have much control over the integers you wish to discard. For example, if we were working with $1, \ldots, 37$, and I discard two numbers, I can choose for one of the numbers to be one, but I cannot choose the other number now. It might as well be $37$, in which case, our method doesn't even give a sharper upper bound (verify this!).