Failure Mode and Effect Analysis (FMEA) is a technique popularly used in reliability engineering for
product design improvement. Many industries use the current FMEA technique for risk assessment. The failure
consequence is quantified in terms of Risk Priority Number (RPN), a product of occurrence, severity, and detection
difficulty. In many situations, the RPN measurement provides no meaning where the quantification on cost basis is
more important and meaningful. This paper presents a cost based failure consequence analysis approach for
quantification of equipment failure. Three consequences of component failure are considered; immediate stoppage of
machine, reduction in production rate and increase in rejection rate. These failure consequences are quantified in
terms of Expected Annual Cost (EAC). Based on the EAC, the criticality of component is decided. The approach is
demonstrated using a case study of a high pressure die casting machine. The method proposed in this paper will help in
making effective cost-driven decisions while making any improvement in the maintenance planning of the system based
on tradeoffs between the cost of improvement and failure cost.