In a world of rapidly changing technologies, reliance on complex engineered systems has become substantial. Interactions associated with such systems as well as associated manufacturing processes also continue to evolve and grow in complexity. Consider how the complexity of manufacturing processes makes engineered systems vulnerable to cascading and escalating failures; truly a highly complex and evolving system of systems. Maintaining quality and reliability requires considerations during product development, manufacturing processes, and more. Monitoring the health of the complex system while in operation/use is imperative. These considerations have compelled designers to explore fault‐mechanism models and to develop corresponding counter‐measures. Increasingly, there has been a reliance on embedded sensors to aid in prognosticating failures, to reduce downtime, during manufacture and system operation. However, the accuracy of estimating the remaining useful life of the system is highly dependent on the quality of the data obtained. This can be enhanced by increasing the number of sensors used, according to information theory. However, adding sensors increases total costs with the cost of the sensors and the costs associated with information‐gathering procedures. Determining the optimal number of sensors, associated operating and data acquisition costs, and sensor‐configuration are nontrivial. It is also imperative to avoid redundant information due to the presence of additional sensors and the efficient display of information to the decision‐maker. Therefore, it is necessary to select a subset of sensors that not only reduce the cost but are also informative. While progress has been made in the sensor selection process, it is limited to either the type of the sensor, number of sensors or both. Such approaches do not address specifications of the required sensors which are integral to the sensor selection process. This paper addresses these shortcomings through a new method, OFCCaTS, to avoid the increased cost associated with health monitoring and to improve its accuracy. The proposed method utilizes a scalable multi‐objective framework for sensor selection to maximize fault detection rate while minimizing the total cost of sensors. A wind turbine gearbox is considered to demonstrate the efficacy of the proposed framework.