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A systematic methodology is described for calculating structured residuals with high fault diagnostic capabilities for detecting sensor and actuators failures. The effort addresses implementation issues for real-time applications such as residual computation complexity and sensitivity to measurement noise. These specific requirements have been rigorously introduced through a cost function measuring the quality of the residual signal. A structural analysis approach of the nonlinear model of the system in conjunction with the unknown variables elimination method is used to derive subsets of residual equations. An algorithm is proposed for selecting the residual equations with maximum "failure isolability" and minimum cost, according to the selected performance criteria. The methodology has been applied to the design of a real-time residual generator for a nonlinear model of a remotely controlled semi-scale YF-22 research aircraft.

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