The problem of fault detection in distributed parameter systems (DPSs) is formulated as that of maximizing the power of a parametric hypothesis test which checks whether or not system parameters have nominal values. A computational scheme is provided for the design of a network of observation locations in a spatial domain that are supposed to be used while detecting changes in the underlying parameters of a distributed parameter system. The setting considered relates to a situation where from among a finite set of potential sensor locations only a subset can be selected because of the cost constraints. As a suitable performance measure, the