The European Rail Traffic Management System (ERTMS) is a major venture initiated by the European Union in order to create an interoperable railway network within Europe. The manufacturers of the ERTMS strive to attain a competitive edge by demonstrating the efficiency of their systems. Achieving the optimal cost effectiveness is one of the significant ways to address the efficiency of the system and involves maximising the availability and minimising the life cycle cost of the system over the system life cycle. One of the important ways of maximising the cost effectiveness of the system is to optimise the maintenance policy. This paper demonstrates the estimation of the cost effectiveness of an ERTMS system. The degradation and repair process of the system is modelled by Petri-Nets. Failure, maintenance and cost data are used as parameters for the model. The model will be useful for systems that experience degradations and are subjected to imperfect maintenance.