Winnipeg's most expensive construction project is now even more expensive.

Upgrades to the North End water-pollution control centre, the largest of the city's three sewage treatment plants, are now expected to cost $1.4 billion, a rise of $600 million from the last estimate.

A report to city council's finance committee said the higher cost is a result of a new conceptual design. While officials hinted in September the new estimate would be "more than $1 billion," the report published Friday is the first to formalize the new project cost.

The report states the upgrades are now so expensive they threaten to derail the project's schedule. A deadline of 2019 is no longer achievable, the report states.

Generally, the city pays for sewage treatment upgrades by raising water and sewer rates and borrowing money.

The upgrades were ordered by the province in 2003 as part of an effort to reduce the amount of phosphorus and nitrogen that flows into the Lake Winnipeg watershed.

The provincial Clean Environment Commission expected all three levels of government to pay for the upgrades on an equal basis, but the city has thus far covered three-quarters of the tab.

In an unrelated piece of financial news, a separate report to council's finance committee said Winnipeg is heading to a year-end operating surplus of $1.7 million, based on accounting from the end of October.

That's up from a $400,000 estimate based on figures from the end of September.