Biogas technology is becoming increasingly popular throughout the world, particularly in countries where governments promote domestic biogas systems. Despite its popularity, problems exist in biogas technology, such as low-quality construction, leakage of pipelines, low biogas production, and lack of maintenance. These problems should be identified and analyzed for effective implementation and efficient operation of small-sized biogas systems (SBS). This research applies the fault tree approach (FTA) to identify failures, and evaluate their effects on the operation of SBS from a technical point of view, based on a nationwide field study in Nepal. Ninety-four sets of SBS were selected and sampled in targeted areas. Five subsystems of SBS were defined, including structural components, biogas utilization equipment, piping system, biogas production, and effluent disposal system. Based on the statistical analysis of the 94 targeted cases, the fault probabilities of the five subsystems are 0.67, 0.48, 0.73, 0.26, and 0.64, respectively. The weights of five subsystems are determined by Delphi method and fault probability of SBS is calculated. The results show that faults on piping systems happen most frequently, and that proper disposal and reuse of bio-slurry are often neglected. Regardless of the social and economic benefits of SBS, implementation scenarios of SBS throughout Nepal are evaluated under a technical perspective, as follows: (1) the operational status of SBS is not optimal. (2) Based on criteria for failures, well-operation ratio is about 53% in practice. (3) Skilled masons are prerequisites for efficient functioning of SBS. (4) Maintenance plays a key role for efficient functioning. The study results prove that FTA is mostly suitable for SBS evaluation and is an effective analysis tool for technical evaluation in the field of biogas technology.