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This paper presents a new approach for monitoring and estimating device reliability of nanometer-scale devices prior to fabrication. A four-layer architecture exhibiting a large immunity to permanent as well as random failures is used. A complete Monte Carlo based tool for a-priori functional fault tolerance analysis was developed, that induces different failure models, and does subsequent evaluation of system reliability under realistic constraints. A structured fault modeling architecture is also proposed, which is together with the tool a part of the new reliability design method representing a compatible improvement of existing IC design methodologies.