This paper summarizes technical progress in a study of incipient fault detection in bus engines. The types of failures to which this method is applicable are those for which there is a gradual deterioration to failure over a relatively long time. In addition this method can also quickly isolate failed components. The fundamental basis of predicting such a fault is real time measurements of engine performance in the form of instantaneous brake torque and the nonuniformity in that torque.For our studies a number of buses were instrumented for real time performance measurements in simulated route operation. A data base was established for those measurements from which the statistical model for predicting failure has been developed.This paper explains the theory of the method, the instrumentation, the experimental results and the statistical model upon which failure prediction is based. The results of this study are applicable to an optimum strategy for maintenance scheduling.