This innovation proposes the development of a technical tool for automated FMECA and diagnostic/prognostic requirement optimization analysis of system designs and implementations. This tool will fill a void that is currently not addressed by any analytical techniques, where the FMECA and design optimization processes are closely integrated with the design/development cycle. FMECA results are fed into an automated optimization analysis. A graphical model of the system is developed and analyzed by means of a formal logic analysis technique called the Dynamic Flowgraph Methodology, which is capable of identifying a desirable mixture of diagnostic/prognostic capability to mitigate the effects of the critical failure modes found in the FMECAs. This innovation has high technical value and commercialization potential, as there is a widespread requirement and use of FMECA in the government and in the commercial sector.