The major Adam Smith Theatre renovation in Kirkcaldy has gone £1.7 million over budget due to Covid-19 and Brexit.
As it stands, soaring costs mean there is not enough money in the budget to complete the works.
And officials warn there is a risk prices could increase further because of market uncertainty.
They have asked councillors to hand over more money to ensure the project is finished in time for a grand re-opening in May 2023.
Plans are already in place for a special programme of events to mark the 300th anniversary of Adam Smith’s birth net year.
It includes the annual Festival of Ideas which has previously attracted big name speakers, including former United Nations Secretary General Kofi Annan.
And council officers say any delay to the multi-million-pound revamp would bring consequences for next year’s programme.
Head of communities and neighbourhoods Paul Vaughan said: “The refurbishment and enhancement of the theatre will bring a new cultural and creative hub to Fife.”
He said it would also support the region’s creative industry and the regeneration of Kirkcaldy town centre.
‘Significant cost challenges’
The £5.1m Adam Smith Theatre renovation began last year, with the aim of modernising the outdated building.
Work includes refurbishing the auditorium, cafe and bar and the building is already fully stripped out.
The Beveridge Suite is also being modernised and other work will fix the leaking roof and external stonework.
In addition, rigging, lighting and audio equipment is being replaced.
In a report to go before councillors on Wednesday, Mr Vaughan says construction costs hit a 40-year high in November.
This is due to shortages and delays caused by the pandemic and Brexit, as well as a rise in energy costs.
“Projects of this size and complexity would, even in normal times, face significant cost challenges,” he adds.
But joinery work that would have cost £850,000 pre-pandemic is now likely to come in at more than £1.2m.
Mr Vaughan recommends reducing the specification of materials to save £150,000.
And he also suggests transferring £1.7m from money set aside by the council to deal with Covid pressures.
Councillors are expected to agree to the request this week.
Famous faces at the Adam Smith Theatre
The Adam Smith Theatre opened in 1899.
And thousands of famous names have graced its stage, including David Bowie, Tommy Cooper, Jools Holland and Eddie Reader.
As well as professional touring productions, it hosts more than a dozen amateur drama and musical groups.
It was last renovated in 1972 to celebrate the 250th anniversary of Adam Smith’s birth.
Kirkcaldy-born Adam Smith is considered the father of modern economics.
And his 1776 book The Wealth of Nations argues the importance of free markets.
He was studied by 20th century economists and philosophers and contemporaries included the French writer Voltaire.
