The cost of Leicester's new flagship Performing Arts Centre may rise £12m to £59m, the city council has revealed.
The council's contribution to the project may be £36.8m
The authority's cabinet has approved a revised budget which covers extra costs and an allowance for contingencies.
Officers said a delay in constructing the centre might put the project back by 16 weeks. It is expected to be open by spring 2008.
The council said it has developed a litigation strategy so that it may be able to recoup the costs of the delay.
Allowing for contingencies and some extra costs, the authority now anticipates it might have to contribute a further £7.2m to the project.
This would mean its total contribution to the building which will replace the Haymarket Theatre would be £36.8m, although it hopes to reclaim much of the extra cost back through litigation.
The rest of the money has come from Arts Council England, East Midlands Development Agency, the European Regional Development Fund and Leicester's economic partnership.
Councillor John Mugglestone said the centre was the largest project of its type in Europe and would provide a lasting heritage, as well as stimulating economic and social regeneration.
"As the project develops, decisions are constantly being made on detailed design and construction issues.
"Sometimes these decisions bring with them new costs and new risks that, in areas we can control, the council has managed as tightly as possible.
"We are determined to realise the vision of this flagship project for the long-term benefit and vitality of our city."