Taunton Deane Borough Council has agreed the price rise after conceding that “contractors and the supply chain are able to increase their profit margins and still win new work” in a rising market.
BAM was awarded the contract in October with work set to start on the new 25m-pool and spa at Blackbrook Pavilion in January.
The BBC reported that council approved the extra funds at a meeting earlier this week.
A council report stated that due to the market picking up, “contractors and the supply chain are able to increase their profit margins and still win new work.
“It is this ability to increase margins which is fuelling the current tender price inflation rather than rising input costs, which are relatively subdued.”
Councillor Catherine Herbert told the BBC: “If we delay this now and come back after Christmas, who’s to say if that contract is going to be available for us and we’ll have even more costs involved in trying to get a new contract.”
A spokesman for BAM Construction denied that the contractor would be getting extra cash for the job.
He said: “This job has been procured under the Construction Framework South West which means the profit levels are capped.”