A methodology to develop an expert system for chemical plant fault diagnosis based on functional-structure of chemical plant is proposed. A methodology to generalize and utilize the heuristic know-edge of plant operators is also developed. A plant can be seen as a Hierarchical set of subsystems. Each subsystem is called a SCOPE. The state of the plant and the behavior of each subsystem is managed by the SCOPES. An expert system based on this functional structure and knowledge base has been developed and ar plied to the subprocess of etylene plant to evaluate the effectiveness of the methodology.