Reliable operation of cyber-physical systems (CPS) of societal importance such as Smart Electric Grids is critical for the seamless functioning of a vibrant economy. Sustained power outages can lead to major disruptions over large areas costing millions of dollars. Efficient computational techniques and tools that curtail such systematic failures by performing fault diagnosis and prognostics are therefore necessary. The Smart Electric Grid is a CPS: it consists of networks of physical components (including generation, transmission, and distribution facilities) interfaced with cyber components (such as intelligent sensors, communication networks, and control software). This grant provides funding to develop new methods to build models for the smart grid representing the failure dependencies in the physical and cyber components. The models will be used to build an integrated system-wide solution for diagnosing faults and predicting future failure propagations that can account for existing protection mechanisms. The original contribution of this work will be in the integrated modeling of failures on multiple levels in a large distributed cyber-physical system and the development of novel, hierarchical, robust, online algorithms for diagnostics and prognostics. If successful, the model-based fault diagnostics and prognostics techniques will improve the effectiveness of isolating failures in large systems by identifying impending failure propagations and determining the time to critical failures that will increase system reliability and reduce the losses accrued due to failures. This work will bridge the gap between fault management approaches used in computer science and power engineering that are needed as the grid becomes smarter, more complex, and more data intensive. Outcomes of this project will include modeling and run-time software prototypes, research publications, and experimental results in collaborations with industry partners that will be made available to the scientific community.