The objective of the proposed research is to develop statistical algorithms for controlling failure trends through targeted maintenance of at-risk components. The at-risk components are identified via chronological history and diagnostic data, if available. Utility systems include many thousands (possibly millions) of components with many of them having already exceeded their design lives. Unfortunately, neither the budget nor manufacturing resources exist to allow for the immediate replacement of all these components. On the other hand, the utility cannot tolerate a decrease in reliability or the associated increased costs. To combat this problem, an overall maintenance model has been developed that utilizes all the available historical information (failure rates and population sizes) and diagnostic tools (real-time conditions of each component) to generate a maintenance plan. This plan must be capable of delivering the needed reliability improvements while remaining economical. It consists of three facets each of which addresses one of the critical asset management issues: * Failure Prediction Facet - Statistical algorithm for predicting future failure trends and estimating required numbers of corrective actions to alter these failure trends to desirable levels. Provides planning guidance and expected future performance of the system. * Diagnostic Facet - Development of diagnostic data and techniques for assessing the accuracy and validity of that data. Provides the true effectiveness of the different diagnostic tools that are available. * Economics Facet - Stochastic model of economic benefits that may be obtained from diagnostic directed maintenance programs. Provides the cost model that may be used for budgeting purposes. These facets function together to generate a diagnostic directed maintenance plan whose goal is to provide the best available guidance for maximizing the gains in reliability for the budgetary limits utility engineers must operate within.