Transport bosses are working to get a £3.8m junction improvement scheme under way before the funding is pulled.
The project, to improve the Canal Road-Stanley Road junction and build a stretch of new dual carriageway along Canal Road to ease congestion, won a Government grant of £2.6 million, with Bradford Council making up the rest.
But the Government will claw back its portion of the cash if it is not spent by March 2015.
Councillor Val Slater, executive member for planning and transport, said it was a “very tight timescale” but the authority was working hard to meet it.
She said: “It is progressing apace. We are tendering now for the firms to come in and do the work. It is vital we ensure we do stick to the required timescale.”
Once a contractor has been selected, it is expected that work will start this summer and finish by summer 2015.
But Coun Slater said this did not mean they would miss the deadline.
She said: “The Council is putting some money in, so for accounting purposes, we spend the Government’s money first, to meet that deadline, then the finishing-off work will come out of the Council’s money.”
The authority has another hurdle to overcome before work can start – it does not yet own all the land covered by the scheme. Some is occupied by leaseholders and one section is owned by the British Wool Marketing Board, which has its head office in Canal Road.
A report on the scheme, going before the Council’s Environment and Waste Management overview and scrutiny committee on Tuesday, says negotiations to acquire all the necessary land and rights are ongoing.
The report also includes a new plan of how the scheme will look, with a segregated cycle lane linking up to the under-construction Canal Road Greenway route.
Coun Slater said the Council aimed to negotiate the change of ownership amicably, and they were not yet considering Compulsory Purchase Orders.
She said once the work began, there would be some disruption for motorists, mainly at weekends, but it would be worth it in the end.
She said: “I’m sure when it’s complete it will make quite a difference.”