Powys County Council also needs to protect itself in case it needs to cover a possible shortfall of £750,000, in the project funding.
This is in case a grant funding bid to the Welsh Government fails, or the council receives less money than expected.
Work on the project to turn the unofficial camp site on the outskirts of Machynlleth into a permanent one, has started.
But, a shortfall of £41,000 in funding was been found in the tendering process, due to safety measures that are now needed on building sites due to coronavirus.
The project will now cost £1.326 million rather than the £1.285 million that had been budgeted for, when the go-ahead for the scheme was given earlier this year.
Portfolio holder for housing, Councillor James Evans said: “This is an ongoing project that’s been discussed for a number of years.
“The tender was £41,000 over what we budgeted