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The council last year announced a revised budget to complete the project alongside Portobello Rd and Harington Point Rd, which rose from an estimated $20 million to $49 million.
Companies were invited to submit tenders to carry out the work, but it was confirmed yesterday only two were received.
The tender eventually selected by the council for further negotiations came in about $20 million above the revised budget.
Council transportation group manager Richard Saunders said he was limited in what he could say, as the council was still talking with the company.
However, he confirmed the preferred tender was ''substantially'' over the project's revised budget, which would lead to prolonged negotiations and further delays to the next stage.
''It has meant delays because we need to be confident we have a project to move forward with,'' Mr Saunders said.
Despite that, talks with the preferred tenderer were close to completion and Mr Saunders hoped he could announce more details early next week.
The improvements aimed to make the road safer.
Widening the road by up to 6m would make room for a new shared pathway for cyclists and pedestrians, protected by a new seawall.
Sections have already been completed, including around Vauxhall and Macandrew Bay, but the council voted in 2015 to accelerate the work and complete the rest of the project by mid-2018.
The latest twist in the project emerged at yesterday's council finance and council-controlled organisation committee meeting, when Cr Lee Vandervis asked council chief executive Sue Bidrose about the project.
He said he had been told the project budget was ''$20 million short'', and Dr Bidrose confirmed the tender price had come in ''significantly over ... in the order of the amount you mentioned''.
Dr Bidrose said the council, like others across the country, was struggling to attract tenders for work as the Christchurch rebuild continued to suck resources into that city.
Those companies that did bid for work often had to inflate their prices when existing resources were already committed, she said.
''The place [Dunedin] is booming and there's a lot going on, and it's probably not going to get any better in the next three or four years,'' she said.