Fault propagation analysis is a method based on graph theory used to study the propagation of the effects of faults and disturbances in the system parts. The inclusion of fault propagation and interference of fault and disturbance effects in the design of fault detection algorithms increases reliability and reduces false alarms in critical equipment. In this paper the failure mode and effects analysis (FMEA) method was used to prepare a list of the possible faults and disturbances of each part of a system including of an induction motor and a centrifugal pump. Then a logical model is obtained through the fault propagation analysis to explain the connection between different parts of this system and the propagation of the electrical, vibrational and process effects. This model can be used to consider the propagation of the effects of faults and disturbances in system parts, and the interference of these effects and to select the appropriate effects or sensor configurations required for robust fault detection. The concept of this method is illustrated in this paper by applying this technique to an experimental system.