The “Owner” vs “Owner Participant”: Considerations in Canadian Alliance Contracts

The Alliance delivery model has been used globally for decades and is gaining traction on complex infrastructure projects in Canada, particularly where traditional delivery models have struggled to manage interface risk or innovation demands.

In Ontario, a modified form of the model is emerging. Under this approach, the project owner effectively wears two hats: first, as the “Owner”, a standalone, non-Participant entity acting as the client; and second, as the “Owner Participant”, a true member of the Alliance alongside the consultant, contractor, and other participants. Notably, significant powers are reserved to the “Owner” in its standalone capacity, allowing it to act outside the Alliance’s integrated decision-making structure.

Understanding this version of an Alliance arrangement is critical for contractors, consultants, and advisors involved in Alliance projects where this is the case. Counsel acting for parties to this modified version require a clear understanding that the “Owner” retains separate discretionary powers, creating a unique role that sits partially outside the Alliance’s governance regime.

Refresher on the Alliance model

The Alliance delivery model is characterised by governance through a single multi‑party Project Alliance Agreement, collective decision‑making by all Participants acting through an integrated Alliance Leadership Team acting unanimously in a “Best-for-Project” way, shared financial outcomes through a target outturn cost and gainshare / painshare mechanism, and a “no blame, no claim” approach to disputes between the Participants. It is a delivery model usually described as one in which all parties bear equal responsibility for project outcomes. Alliance models emphasise collaboration, behavioural alignment, and shared outcomes, often summarised as “win together, lose together”.

However, the nature of this model transforms where one of the parties (i.e., the “Owner”) gets to sit outside this unanimous “Best-for-Project” decision-making regime.

Participants

Participants in this model consist of the Non-Owner Participants, being the consultant, the contractors, etc. (“NOPs”), and the Owner Participant (collectively, the “Participants”).

All “Participants” have equal standing within the Alliance, though individual responsibilities may differ.

Among other obligations, each Participant must comply with the Alliance Charter and the Alliance Principles, act at all times in a manner that is consistent with a “Best-for-Project” approach, and commit to avoiding disputes amongst each other, typically backed up by a legally binding waiver of claims.

Some obligations apply only to the NOPs and some rights accrue only to the Owner Participant. It is important to review and understand how and to whom each right and obligation is allocated.

Owner vs Owner Participant

While the “Owner” and the “Owner Participant” are in fact the same legal entity (e.g., the government ministry, Crown agency, or broader public sector organisation that owns the project), the Project Alliance Agreement treats this legal entity as two distinct bodies having two different roles on the project – in effect, the Owner ‘wears two hats’. The former is the client (non-Participant to the Alliance) represented by a natural person, being the “Owner’s Representative”, and the latter is a Participant to the Alliance represented by its ALT representative.

Publicly available Project Alliance Agreements in Ontario reserve a number of key powers to the Owner (as opposed to the Participants acting through the Alliance Leadership Team), including notably the Owner’s unilateral ability to manage Adjustment Events and the Target Outturn Cost. In addition, the Owner may not be subject to certain key alliance principles such as good faith, open-book requirements and “Best-for-Project” decision-making obligations.

Implications of owner-party bifurcation

This bifurcated “Owner” / “Owner Participant” structure introduces a potential tension. While the Participants are bound to operate under a unified “Best-for-Project” mandate with shared financial risk and a no-disputes ethos, the Owner sitting outside that regime retains unilateral decision-making powers that can materially affect project scope, cost, and outcomes with disparate and heightened control of painshare consequences. For example, the Alliance Leadership Team may have decided that a Variation due to an Adjustment Event is Best-for-Project, but the Owner via the Owner’s Representative may ultimately veto that decision. In this case, there is a potential for parties to be at a deadlock as to how to move forward.

For NOPs, this may create a potential misalignment between risk and control, highlighting the importance of carefully considering how discretionary powers (such as suspension, scope changes, or termination) align with compensation mechanisms and the Target Outturn Cost.

For the Owner Participant, the dual role can also introduce practical and behavioural considerations in maintaining trust and transparency within the Alliance while its “other hat” carries external authority.

Ultimately, this modified structure demands heightened diligence in collaboration and engagement, particularly around governance, risk allocation, and financial adjustments, to ensure that the intent of the Alliance is preserved and the “win together, lose together” foundation is not eroded.

How we can help

Navigating a modified Alliance structure where the Owner operates both inside and outside the Participant regime requires careful legal and strategic guidance. Beale & Co assist contractors, consultants, and public sector clients in understanding and negotiating these arrangements to ensure that risk, control, and compensation are appropriately aligned. Leveraging the firm’s global experience, our team in Toronto provides targeted advice on drafting and reviewing contractual documentation relating to alliances, including Alliance Development Agreements and Project Alliance Agreements, with particular focus on governance frameworks, the allocation of reserved powers, and the interaction between unilateral Owner rights and the gainshare / painshare model.

If you have any questions regarding the information discussed in this article, please contact Nadir Hasan and Sherry Hussain.