Home / Current Issue / Paper 1723784
Strategic Cost Estimation and Bid Optimization for Electrical Infrastructure and Power System Projects: A Framework for Sustainable Project Delivery
Subject area: Science,Engineering and Technology · Area of research: Electrical Infrastructure, Power Systems, Projects
Abstract
This study develops a Strategic Cost Estimation and Bid Optimization Framework (SCEBOF) for electrical infrastructure and power system projects delivered through engineering, procurement, and construction (EPC) arrangements. The framework integrates scope definition, bottom-up cost engineering, resource planning, quantified risk assessment, procurement governance, market intelligence, strategic pricing, management approval, and post-bid learning. Its practical application is demonstrated through a representative Saudi utility substation and transmission-integration project with an estimated base cost of SAR 121.5 million. Scenario analysis compares aggressive, balanced, and conservative bidding positions, while sensitivity tests quantify exposure to material escalation, labor inflation, schedule delay, and exchange-rate variation. Major electrical equipment accounts for 51% of the project cost and produces the largest sensitivity effect: a 20% increase adds SAR 12.4 million. A four-month delay adds SAR 4.9 million, while a 10% adverse currency movement adds SAR 6.0 million. The results indicate that a balanced 8% markup offers the strongest practical trade-off between competitiveness and profitability, provided that contingency is linked to quantified risk and critical equipment is secured through early procurement and supplier-risk controls. SCEBOF gives utilities, EPC contractors, and infrastructure developers a repeatable method for improving estimate reliability, protecting margin, strengthening governance, and supporting sustainable project delivery. The framework is particularly relevant to Saudi Arabia’s grid modernization, localization, spending-efficiency, and infrastructure objectives under Vision 2030.
Keywords
bid optimization; cost estimation; electrical infrastructure; EPC projects; power systems
References
[1] AACE International. Risk analysis and contingency determination using expected value. Recommended Practice No. 44R-08. 2021.
[2] Chartered Institute of Procurement and Supply. Managing supply chain risk (CORE). 2nd ed. 2024.
[3] International Federation of Consulting Engineers. Conditions of contract for EPC/turnkey projects. 2nd ed. 2017.
[4] International Energy Agency. Electricity grids and secure energy transitions. Paris: IEA; 2023.
[5] International Organization for Standardization. ISO 31000: Risk management — Guidelines. Geneva: ISO; 2018.
[6] International Organization for Standardization. ISO 21502: Project, programme and portfolio management — Guidance on project management. Geneva: ISO; 2020.
[7] Project Management Institute. A guide to the project management body of knowledge (PMBOK Guide). 7th ed. Newtown Square, PA: PMI; 2021.
[8] Saudi Electricity Company. Annual report 2024. Riyadh, Saudi Arabia; 2024.
[9] Saudi Vision 2030. Vision 2030 annual report 2023. Riyadh, Saudi Arabia; 2023.
[10] World Bank. Procurement regulations for IPF borrowers. Washington, DC: World Bank; 2023.
[11] Leśniak A. Statistical methods in bidding decision support for construction companies. Applied Sciences. 2021;11(13):5973. https://doi.org/10.3390/app11135973
[12] Zaqout IS, Islam MS, Hadidi LA, Skitmore M. Modeling bidding decisions and bid markup size for construction projects: A fuzzy approach. Engineering Applications of Artificial Intelligence. 2022;113:104982. https://doi.org/10.1016/j.engappai.2022.104982
[13] Helmold M. Value-based and cost-based pricing concepts. In: Performance excellence in marketing, sales and pricing. Cham: Springer; 2022. p. 75–85. https://doi.org/10.1007/978-3-031-10097-0_7
[14] International Energy Agency. Building the future transmission grid: Strategies to navigate supply chain challenges. Paris: IEA; 2025.
[15] Energy Sector Management Assistance Program. Understanding the cost of transmission infrastructure: Insights from World Bank Group-financed transmission projects. ESMAP Papers. Washington, DC: World Bank; 2026. https://doi.org/10.1596/44729
How to cite this paper
@article{1723784,
author = {Omer Sikander},
title = {Strategic Cost Estimation and Bid Optimization for Electrical Infrastructure and Power System Projects: A Framework for Sustainable Project Delivery},
journal = {Iconic Research And Engineering Journals},
year = {2026},
volume = {10},
number = {4},
pages = {1082-1093},
issn = {2456-8880},
url = {https://www.irejournals.com/formatedpaper/1723784.pdf},
abstract = {This study develops a Strategic Cost Estimation and Bid Optimization Framework (SCEBOF) for electrical infrastructure and power system projects delivered through engineering, procurement, and construction (EPC) arrangements. The framework integrates scope definition, bottom-up cost engineering, resource planning, quantified risk assessment, procurement governance, market intelligence, strategic pricing, management approval, and post-bid learning. Its practical application is demonstrated through a representative Saudi utility substation and transmission-integration project with an estimated base cost of SAR 121.5 million. Scenario analysis compares aggressive, balanced, and conservative bidding positions, while sensitivity tests quantify exposure to material escalation, labor inflation, schedule delay, and exchange-rate variation. Major electrical equipment accounts for 51% of the project cost and produces the largest sensitivity effect: a 20% increase adds SAR 12.4 million. A four-month delay adds SAR 4.9 million, while a 10% adverse currency movement adds SAR 6.0 million. The results indicate that a balanced 8% markup offers the strongest practical trade-off between competitiveness and profitability, provided that contingency is linked to quantified risk and critical equipment is secured through early procurement and supplier-risk controls. SCEBOF gives utilities, EPC contractors, and infrastructure developers a repeatable method for improving estimate reliability, protecting margin, strengthening governance, and supporting sustainable project delivery. The framework is particularly relevant to Saudi Arabia’s grid modernization, localization, spending-efficiency, and infrastructure objectives under Vision 2030.},
keywords = {bid optimization; cost estimation; electrical infrastructure; EPC projects; power systems},
month = {October},
}