This paper presents an approach for the determination of the optimal parameters and placement of UPFC as the major concern is to ensure the full potential of utilization in the transmission network. Voltage source model is utilized to study the behaviour of the UPFC in regulating the active, reactive power and voltage profile. This model is incorporated in Newton Raphson algorithm for load flow studies. This paper proposes particle swarm optimization for the exact real power loss minimization including UPFC. Installing UPFC with such optimal parameters will eliminate or minimize the overloaded lines and the bus voltage violations under critical contingencies. The implementation of loss minimization for the optimal location of UPFC was tested with IEEE-14 bus system.