The transportation community has applied sensors for various traffic management purposes, such as in traffic signal control, ramp metering, traveler information development, and incident detection by collecting and processing real-time vehicle position and speed. The U.S. transportation community has not adopted any single newer traffic detectors as the most accepted choice. The objective of this research is to develop an infrared sensor system in the laboratory that will provide improved estimates of vehicle speed compared to those available from current infrared sensors, to model the sensor’s failure conditions and probabilities, and ultimately refine the sensor to provide the most reliable data under various environmental conditions. This paper presents the initial development of the proposed sensor system. This system will be implemented in a highway segment to evaluate its the risks of failure under various environmental conditions. A modified design will then be developed based on the field evaluations.