Plymouth City Council said the work will now cost £29.9m following previous estimates of up to £36.8m.
Designs were tweaked in February and since then detailed work has been carried out to establish the final cost of construction.
Work has has included digging exploratory trial pits on Armada Way to get a more accurate picture of what is beneath the surface and detailed cost review sessions with contractor Morgan Sindall who signed a pre-construction deal in 2022.
The council will consider the costs of the scheme at its cabinet meeting next week and if agreed, contracts will be signed and work will start in October.
Councillor Tudor Evans, Leader of Plymouth City Council, said: “We always said that the overall costs published earlier in the year were a ballpark estimate and included the enabling works. We had to plan for worst case scenario.
“Now that we have completed our exploratory trial pits, we have clarity on the scope of the works needed, enabling us to have detailed conversations with the contractor.
“Let’s be clear, creating a city centre that we all can be proud of cannot be done on the cheap. Construction costs have gone up exponentially in recent years – the cost of materials alone has more than doubled.
“We are trying to create something really special that will be a real focal point for our city. Plymouth deserves the best as we embark on a new chapter for our unique city centre.”
