The city of Winnipeg will miss key deadlines for the Plessis Road underpass project, possibly triggering the loss of funding from the other two levels of government.

The delays are outlined in a report headed to the city's finance committee later this week and they mean more headaches for drivers and even worse for residents who live near the huge construction project.

"Right now they have railway ties just parked outside our fence so we can't even open our windows because the smell of them. I guess the diesel they are covered with just gives you a headache within five minutes," said Denny Giasson.

Giasson lives on Paul Martin Drive, just on the edge of the underpass project.

"It's a real pain in the ass just trying to get around the construction there. The smell, the constant construction, like on weekends and that. They are busy all week and then on the weekends too, you can't really sit outside."

Building an underpass crossing a CN Rail track in Transcona has been a complicated project from the start, involving relocating underground pipelines, new lanes of road and a temporary detour for the rail line.

There were key deadlines that had to be met, according to the funding agreement between the city of Winnipeg, the province of Manitoba and the government of Canada.

According to the report to the finance committee of city hall, in April last year, the federal government added some conditions with some deadlines;

"In the event that the city is unable to meet these conditions, Canada may terminate the agreement or suspend its funding obligations."

The city was required to have two lanes of Plessis between Dugald Road and Kernaghan Avenue open to traffic by the end of this July. Instead the city wants that deadline pushed back to October 31, 2015.

The city also wants to move the deadline for completion of all four lanes of the project to Sept. 30, 2016, a full year behind schedule . These changes are contributing to move the final completion date for the work to no later than March 31, 2017, as opposed to March 31, 2016.

The city has asked the other levels of government for extensions on the funding agreement.

The $77-million project is now estimated to cost an extra $8.4 million, but according to the report to the finance committee the city hopes to recoup part of the extra costs from the railroad authority.