Issues associated with the placement of sensors in structural control and reliability systems are analyzed. The sensor output is used to extract modal coordinates. Optimization procedures are used to determine the most desirable locations of the operational sensors. It is shown that modal filtering by means of spline functions is more desirable for modal coordinate extraction because of stability, robustness, and convergence considerations. Selection of the number and location of the backup sensors is considered. It is observed that an even distribution of the operational and backup sensors yields satisfactory results. However, an uneven placement of sensors diminishes the quality of the modal coordinate extraction.