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A Condition Based Maintenance (CBM) policy is a procedure used by maintenance personnel to interpret a set of measured machine condition indicators and decide whether or not to renew a physical asset at the current moment. Traditionally CBM data interpretive policies have been obvious. For example, for process machinery, if a temperature, pressure, or vibration reading exceeds a pre-defined limit, maintenance should be carried out before functional failure. However our ability to collect large amounts of condition data has continually outpaced our ability to define policies for its interpretation. The condition indicators may sometimes contradict one another. Upward or downward trends are frequently obscured by randomness in the data. In many instances no clear set of limits or rules have been developed to indicate whether or not a failure process is underway and how much time is available before the physical asset is no longer able to perform one of its functions. The EXAKT CBM optimizing methodology was applied to a set of experimental condition data on gearboxes in order to develop an optimal interpretation policy. An optimal policy is a procedure for data interpretation, which, if applied consistently in a CBM program, minimizes the cost of maintenance of a physical asset. 2 1