The Auditor-General says local authorities may have underestimated the cost of repairing earthquake damaged assets and infrastructure in Christchurch.
The concern is raised in her report on how central and local government have performed so far in rebuilding the city.
Lyn Provost released the report on Tuesday, saying the true extent of the damage to underground infrastructure will not be known until repairs actually begin and there is a risk that costs could rise.
Ms Provost says the Christchurch City Council is already reporting a shortfall of $196 million between its insurance payout for damage to water, stormwater and sewerage pipes and the actual cost of repairs.
The Auditor-General notes while the Government is helping to fund the rebuild, Christchurch ratepayers are being asked to pay $1 billion towards the final cost.
She also warns there is a risk of delays in the rebuild if a skills shortage is not addressed.
The report points to initiatives such as the Stronger Christchurch Infrastructure Rebuild Team as an example of the way agencies and private companies are working together well to rebuild 'vertical infrastructure' such as roads and sewerage pipes.
However, it also says residents in the Port Hills have felt that agencies are not doing a good job at communicating the issues they face around the dangers of rockfall and cases where it is too dangerous for people to return to their homes.
The report acknowledges the complex issues around insurance, with Ms Provost promising further work on the ongoing expense of this for the public sector.
