The troubled Edinburgh Tram project is facing cost overruns of more than £50M, council leaders have said.
Contingency plans are being drawn up to borrow the additional funds for the Edinburgh project, which had been expected to cost £545M.
Edinburgh City Council is also looking at the possibility of cancelling its contract with German firm Bilfinger Berger which is building the line.
Edinburgh transport convenor Gordon Mackenzie said: “I think now it looks quite likely that we will have to go over the £545M. We`re looking at the costs that are coming through, the additional works that we`re having to do and the results of the disputes that we`ve had ongoing for some time now.
“Our judgement is that that its going to be more than £545M.”
Plans have been drawn up to borrow up to 10% - £54.5M - in additional funding for the scheme, although the overrun may not reach this level. A report will come before councillors next week.
But the council has ruled out going to the Scottish Government for a bailout.
“Ministers are fully aware of what`s happening here and we`re not anticipating going to them for additional funds,” Mackenzie added.
He said a “properly performing contractor” could finish the project by the end of 2012.
But he added: “I don`t think its likely based on the way that they have been behaving over the last couple of years, so I think its more realistic that we will be into 2013.”