More money will be needed to complete the refurbishment of Eden Court in Inverness after faults with older buildings on the site were uncovered.
Preservation work on stairs in the 19th Century Bishop's Palace
Theatre bosses said the £19.3m revamp would require a further £3m.
They said £2m was for repairs to the 30-year-old building and nearby 19th Century Bishop's Palace. The remaining £1m would be for "unforeseen issues".
Eden Court said the repairs would delay its re-opening. It was to play a lead role in Highland Year of Culture.
More than two-third of the work has been completed.
As well as building new facilities, the Eden Court project includes major repairs to the theatre, which was built in 1976, and the Bishop's Palace which was completed in 1878.
Eden Court said flaws with the two buildings had been known prior to the start of the work.
However, further defects have been found including extensive rot across the three-storey palace.
Director Colin Marr said: "This increase in costs is a blow to us, but this large scale repair work must be carried out and cannot be left undone.
"The implication of a slight delay in an opening date is also a great concern for us and we are working very hard to finalise our reopening date to allow our programme to be confirmed."
Eden Court has approached Highland Council, the owners of the building, for a further £600,000.
Councillors will consider the request at their full meeting on 5 April.
It has secured additional funding from Highlands and Islands Enterprise and has sought support from the Scottish Executive and the European Regional Development Fund.