This paper presents a methodology for assessment of diagnosability of mechanical and hydraulic systems. The method is developed on the basis of relationships between system performance parameters and physical objects, that is, components of the system. These relationships are identified by system functional domain and are modeled in terms of a bipartite graph, called Diagnosability Bipartite Graph (DBG). A matrix called Diagnosability Matrix (DM) represents the DBG. Various diagnosability parameters of the system are derived from the DBG and the DM and these are useful in evaluation and comparison of design variants of the system. These parameters: are maximum number of set conflicts (MNS), maximum number of components in a set conflict (MNCS), diagnosability effort and cost (DEC), and average merit of diagnosability (AMD). The design having the lowest value of MNCS, AMD, and DEC; and highest value of MNS has the highest diagnosability. On the basis of these, a best design alternative is selected from diagnosability point of view. Moreover, components, which have poor diagnosability, are also identified. Maximum number of set conflicts (MNS) also guides in system fault diagnosis. The proposed procedure aids in the design and development of maintainable systems from diagnosability consideration. The method can also be used for evaluating and comparing the diagnosability of the systems. This method is illustrated with the help of two examples.