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The Crystal Pool’s $140 Million Gap that Inflation Cannot Explain


Arthur McInnis
Feb 21, 2026

Summary:

Victoria’s Crystal Pool replacement project carries a $209.2 million price tag, $140 million more than the 2017 estimate of $69.4 million. While the City has attributed this increase primarily to construction inflation, industry benchmarks show that inflation accounts for only about $35 million of the rise, leaving roughly $103 to $105 million unexplained by market forces alone. The rest is a story about choices. 

The main driver is scope expansion. The approved facility is 52 percent larger than originally planned, featuring a 50-metre Olympic pool instead of a 25-metre pool, a leisure pool with lazy river, multiple hot pools, underground parking, and enhanced building code requirements.

Additionally, years of project delay compounded costs during the steepest inflation period (2021-2022), and the City never provided ratepayers with an updated, inflation-adjusted refurbishment alternative, which might have cost $80 to $100 million, leaving voters to choose between the status quo and a $209 million replacement without a credible middle option.

Further complicating matters, the architect HCMA was terminated by Burnaby in 2023 after designing a comparable facility that came in 81 percent over budget, yet Victoria retained the same firm without a fixed-price commitment or apparent competitive re-evaluation, raising questions about cost control and procurement governance.

Finally, if not worrying enough, the City also never commissioned an independent value-for-money (VfM) analysis comparing conventional procurement to alternative delivery models such as public-private partnerships (P3s) or Design-Build-Finance arrangements. This omission may reflect Council’s ideological alignment with organised labour, which opposes P3s as a matter of policy, but which left ratepayers without assurance that the chosen procurement path adequately protected against cost overruns.

Analysis:

Victoria’s Crystal Pool replacement project carries a $209.2 million price tag, a figure the City has attributed largely to the brutal inflation in construction costs that followed the pandemic. That explanation is not wrong. But it is far from complete. When you apply industry benchmarks to the numbers, the inflation story accounts for perhaps a third of the cost increase. The rest is a story about choices.

What the Benchmarks Actually Say

The Statistics Canada Building Construction Price Index and the BC Construction Association both confirm that non-residential construction costs in Vancouver rose by approximately 50 to 52.5 percent between 2017 and 2024. Normac’s 2025 Canadian Construction Cost Trends report independently corroborates this, placing the Vancouver Non-Residential Construction Price Index increase at roughly 55 percent over the full decade from 2014 to 2024. The British Columbia Construction Association’s Fall 2025 Economic Report is blunt: building costs have risen more than 50 percent since 2017, running at more than twice the rate of general consumer inflation, with the most severe spike concentrated in 2021 and 2022.  Costs overall in Vancouver are routinely used as a proxy benchmark for Victoria where each cities’ respective advantages and disadvantages largely offset each other.

This is a real and documented phenomenon. The construction sector absorbed genuine shocks: supply chain disruptions, labour shortages, and material price surges that were largely outside any municipality’s control.

Where the Math Stops Adding Up

Here is the problem. The 2017 estimate for the Crystal Pool replacement was $69.4 million. Apply Statistics Canada’s 52.5 percent Building Construction Price Index (BCPI) escalation to that figure and you arrive at approximately $105 to $106 million by 2024. The approved budget is $209.2 million. That leaves an unexplained gap of roughly $103 to $105 million.

The City attributed $76.5 million of the increase specifically to labour and materials inflation. Against a BCPI-justified increase of approximately $35 million on the original scope, that figure is overstated by roughly $40 million unless the City is blending an inflated baseline that already incorporates scope expansion, which would conveniently obscure the distinction.

Not the Same Building Anymore

The critical point that gets lost in the inflation narrative is this: the 2017 estimate and the 2024 budget are not for the same building. The approved facility is 52 percent larger in floor area than what was originally contemplated. It features a 50-metre Olympic-length pool in place of the original 25-metre pool, a leisure pool complete with a lazy river, multiple hot pools at different temperatures, saunas, a gymnasium, and underground parking, none of which figured prominently in the original scope. Underground parking alone added $15.5 million. New BC Building Code energy and climate requirements added another $14 million.

Strip out the 52 percent size increase and remove the parking and building code additions, and a scope-adjusted like-for-like figure lands at roughly $108 million, almost exactly what the BCPI benchmarks would predict for an inflation-adjusted rebuild of the original facility.

Delay as a Cost Multiplier

It is worth acknowledging that delay compounded every one of these factors. The project was first costed in 2017, deferred in 2020 when Council declined to spend $750,000 on a feasibility study, and then shelved through the pandemic. Each year of inaction meant repricing against a construction market that, particularly in 2021 and 2022, was moving at a historic pace. A project that might have been constructable for $130 to $140 million in 2019, even with modest scope enhancements, became a $209 million project by the time Council finally committed.

What Voters Were Never Shown

Compounding all of this is a procedural failure that has received far too little attention. When the Crystal Pool project re-entered active deliberation after 2020, the feasibility process considered only replacement options. Refurbishment, which as far back as 2016 had been estimated at $40 to $56 million, was quietly abandoned without being recosted or subjected to the same rigorous analysis as the replacement scenarios. By 2025, the architecture firm leading the project, HCMA Architecture + Design, had never been asked to produce an updated, inflation-adjusted refurbishment estimate for public comparison.

That omission is significant. A properly costed refurbishment option, one that addressed the failing mechanical systems, waterproofing, and accessibility deficiencies identified in the facility assessment, might well have come in at $80 to $100 million after applying BCPI escalation, delivering a serviceable facility at less than half the cost of what was approved. That was not a referendum on the merits, it was a managed outcome, something in which this Council specialises.

The Architect Question: Design Risk Without Cost Certainty

The refurbishment question is made sharper still by examining the track record of the firm retained to lead the project. HCMA Architecture + Design was awarded the Crystal Pool design contract in December 2017 for $3.3 million. This was a conventional design services contract, not a design-build arrangement. Under a design-build contract, the architect and contractor jointly assume risk and commit to a fixed price; under a pure design services contract, the architect produces the design and the construction cost risk remains entirely with the municipality.

Victoria has explicitly confirmed that no fixed-price guarantee exists for the Crystal Pool project. HCMA remains engaged to this day, currently in the concept design phase.

The firm’s recent history elsewhere in British Columbia warrants serious scrutiny. HCMA was the architect on Burnaby’s Burnaby Lake Aquatic and Arena facility, a broadly comparable civic recreation project. In August 2023, Burnaby city staff reported to Council that “the project as currently designed cannot be constructed for the approved budget” and the city terminated its agreement with HCMA. The numbers tell the story plainly: the facility was originally estimated at $187 million in March 2022; by the time of HCMA‘s termination, the design had come in at $337.6 million, nearly double. Burnaby’s mayor called the costs “ridiculously expensive.”

Victoria’s $209.2 million budget includes a $31.8 million escalation allowance and a $24 million contingency, which the City describes as reflecting robust risk management.

When a $55.8 Million Cushion Is Not Independent

The approved $209.2 million budget is not simply a construction estimate. It is structured in layers, and understanding those layers is essential to evaluating whether it is credible. The base construction and project cost, covering design, demolition, construction, and project management, sits beneath two substantial add-ons. The first is $24 million in contingency, reserved for unforeseen issues during construction: unexpected ground conditions, delays, additional labour requirements, or design changes. This is money set aside for problems that cannot be predicted in advance. The second is $31.8 million as a cost escalation allowance, reserved specifically to cover price increases from inflation and market volatility between now and the end of construction which is not expected until approximately 2030. Together these total $55.8 million, representing approximately 26.6 percent of the entire approved budget held in reserve against future uncertainties.

Why This $55.8 Million Matters

On the surface, carrying $55.8 million in risk provisions may sound like prudent fiscal management and the City presents it precisely that way. The difficulty is that both figures were derived from and sized against HCMA‘s own cost estimates, not an independently commissioned risk analysis.  After the Burnaby Lake Aquatic and Arena facility debacle asking HCMA to assess the risk of cost overruns on its HCMA-designed project is structurally analogous to asking a contractor to audit their own invoices.

There is a further concern. Given that the BCCA’s Fall 2025 report identifies continued inflationary pressures in the BC construction sector, a $31.8 million escalation allowance on a base construction cost of over $150 million across five years is not obviously conservative. It represents roughly 20 percent of the base cost held against future inflation, plausible if costs moderate, but potentially insufficient if the BC construction market re-accelerates, particularly given ongoing infrastructure spending pressures from provincial housing legislation and federal capital programs.

In short, the $55.8 million in provisions does not make the budget robust. It makes the budget optimistic with a cushion. Whether that cushion is adequate depends entirely on whether the underlying cost model it sits on top of is accurate.

This Was a Decision, Not an Inevitable Outcome

What happened is this.  Over a decade of deferral, deliberation and procrastination, the Council’s project’s ambitions expanded substantially.  Its scope grew to reflect aspirational programming goals rather than the original replacement mandate, and soft costs (design fees, project management, contingency reserves, and escalation allowances) grew proportionally alongside the larger budget. Inflation accelerated all of this. It did not cause it.

Ratepayers who voted in the February 2025 referendum approved borrowing nearly $170 million on the basis that rising construction costs left the City no choice. They deserved a fuller account of how much of that cost was chosen, not imposed and they deserved a genuine alternative to consider.

When Ideology Narrows the Menu of Options

There is a broader governance question that Victoria’s residents deserve to examine honestly. The 2022 municipal election produced a Council in which Mayor Marianne Alto and five Councillors received formal endorsements from both the Victoria Labour Council (VLC) and the BCGEU, both organisations publicly and strenuously opposing P3s as a matter of explicit policy. CUPE, whose locals represent workers at facilities like Crystal Pool, has produced extensive national policy positions denouncing P3s, arguing that they eliminate jobs, lack transparency, and exclude municipalities from the decision-making process.

That opposition is not entirely without basis as there are documented Canadian examples where P3 arrangements delivered neither the cost certainty nor the value-for-money that proponents promised.  The BC Auditor General has also previously found that some P3 projects cost more than conventional public financing would have. The P3 model is not a panacea.

The point, however, is not that a P3 would necessarily have produced a cheaper Crystal Pool. The point is that a rigorous, independent value-for-money analysis, the kind that Partnerships BC was specifically created to conduct, was never commissioned, never presented to the public, and apparently never seriously considered. A Design-Build-Finance model, even a partial one limited to construction risk transfer, was not evaluated against the conventional procurement path that Victoria ultimately chose.

The failure here is not that Council chose public delivery over a P3. Reasonable people can reach that conclusion after proper analysis. The failure is that an analysis was never done. When a Council’s ideological alignment with organised labour forecloses even the consideration of alternative procurement models, the resulting $103 million gap between what construction inflation justifies and what the project costs is not simply a product of market forces. It is, in meaningful part, a product of the choices that political alignment made unavailable.

Arthur McInnis is the former head of the Construction Practice Group for Asia at Clifford Chance in Hong Kong, at the time the world’s largest law firm.

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See also:

Crystal Pool Referendum: Vote YES! to a retrofit. Vote NO! to a replacement. By Moira Walker – CRD Watch Homepage

LETTER: Saanich’s list of excuses continues to grow for lack of Vote Dashboard | Victoria News

Excerpt regarding questionable cost increases supposedly based on cost pressures:

“I know it’s a fierce competition. This one though takes the cake: A Saanich staff report proposed “to approve a one-time budget increase for Fire Station No. 2 redevelopment from $26,590,000 to $44,628,854.” A senior staff member suggested $6 million be potentially earmarked toward it from the province’s Growing

Communities Fund. Among key reasons provided by a senior staffer that night for the massive cost escalation was the pandemic and the war in Ukraine. A growing population was another reason provided during the proceedings.”