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Annex 60 is developing and demonstrating new generation computational tools for building and community energy systems based on the nonproprietary Modelica modeling language and Functional Mockup Interface (FMI) standards. Demonstrations will include optimized design and operation of building and community energy systems. Within the Annex 60, Activity 2.3 focuses on the use of models to augment monitoring, control and fault detection and diagnostics methods. This promises to detect a degradation of equipment efficiency over time because measured performance can be compared to expected performance at the current operating conditions. Furthermore, use of models during operation allows operational sequences to be optimized in real-time to reduce energy or cost, subject to dynamic pricing. This paper will offer an overview of the work carried out within this IEA Annex 60 Activity 2.3 both in terms of approach and case studies with a particular focus on model use during operation for fault detection and diagnosis.