Abstract: A method for establishing an alert or an alert limit for monitoring a mechanical device includes identifying faults that can be recognized by their effect on measured trends and determining a set of available sensors for monitoring the trends. Representative data are acquired and processed to obtain a statistical characterization of the trends. In addition, a parameter variance is determined for at least one alert test in accordance with the statistical characterization. The method further includes analyzing Type I and Type II error risks and associated financial penalties to adjust parameters associated with the alert test and programming an automated alert system to utilize the adjusted parameters to identify measured trends of a mechanical device that are to be brought to the attention of a human analyst.