Abstract This paper proposes an integrated framework to design wide area measurement system (WAMS) addressing the challenges of expansion planning and unknown transformer taps. The proposed framework is formulated as a mixed-integer linear programming (MILP) problem. It minimizes the number of substations disrupted for phasor measurement unit (PMU) placement, PMU buses, and PMU measuring channels. Concepts of substations and buses are separately treated. Power system expansion planning is also considered in order to achieve an optimal solution with the least cost of disrupting existing and future substations. Observability constraints are defined to make both present and expanded grids observable since the time span of WAMS planning is usually shorter than network expansion planning. Moreover, special attention is paid to multiple voltage levels inside a substation; transformers with unknown tap settings are exempt from being treated as observability paths and locating vicious measurement channels. Furthermore, novel ideas are proposed to model branch outages using the concept of backup observability and to model PMU failure using a hybrid method which is a modified version of previous ones. Numerical results from testing the proposed framework on standard test systems verify its performance from perspectives of solution optimality and computational burden.