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Johnson Street Bridge was built in 1924 and is reportedly one of only two counterweight bridges left in the world. (CBC)

The estimated cost of replacing the Johnson Street Bridge across Victoria's inner harbour has jumped to $92.8 million, due to increasing engineering and construction costs.

The city initially expected the project to cost $77 million dollars, but a report going before city council on Thursday recommends approval for an option that would cost 20 per cent more.

However, a recently-announced grant from Ottawa should mean the spike won't hit taxpayers.

Victoria mayor Dean Fortin says he wants to know what went wrong with the original estimate.

"I'm frustrated and surprised and want to know why we're looking at upwards of 15 million dollars cost escalation from what we originally had presented and approved," he said.

The Johnson Street Bridge was built in 1924 to connect downtown Victoria with Esquimalt, and is reportedly one of only two counterweight bridges of its type left in the world. The counterweight design allows the bridge to rise so taller ships may sail beneath it.

Victoria residents voted to replace the iconic blue structure in November, 2010, with a three-lane bridge, complete with bike lanes, a multi-use path and dedicated sidewalk, to be built immediately north of the existing bridge.

The bridge replacement will be the largest capital project in the city's history and is scheduled to be complete by 2016.