In this paper, the Functional Failure Identification and Propagation (FFIP) framework is introduced as a novel approach for evaluating and assessing functional failure risk of physical systems during conceptual design. The task of FFIP is to estimate potential faults and their propagation paths under critical event scenarios. The framework is based on combining hierarchical system models of functionality and configuration, with behavioral simulation and qualitative reasoning. The main advantage of the method is that it allows the analysis of functional failures and fault propagation at a highly abstract system concept level before any potentially high-cost design commitments are made. As a result, it provides the designers and system engineers with a means of designing out functional failures where possible and designing in the capability to detect and mitigate failures early on in the design process. Application of the presented method to a fluidic system example demonstrates these capabilities.

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