In the performance domain, physical performance is a measure that represents some degree of system, subsystem, component or device success in a continuous sense, as opposed to a classical binomial sense (success or failure). If applicable sensing and monitoring means exist, physical performance can be observed over time, along with explanatory variables or covariables. Performance-based reliability represents the probability that performance will remain satisfactory over a finite period of time or usage cycles in the future when a performance critical limit (which represents an appropriate definition of failure in terms of performance) is set at a fixed level, based on application requirements. In the case of inadequate knowledge of the failure mechanics, this physical based empirical modeling concept along with performance degradation knowledge can serve as an important analysis tool in reliability work in product and process improvement.