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In this paper, a new formalism called Engineering Functional Analysis (EFA) is presented. This formalism results in higher degrees of decentralization for engineering system optimization than is otherwise possible. By decentralization, it is meant that the improvement or optimization of individual components by themselves (i.e., components which are isolated economically from the rest of the overall system) serves to improve or optimize the system as a whole (within some degree of error, which defines the degree of decentralisation). Higher degrees of decentralization are important in that they provide a more stable economic environment for individual components, thus permitting more rapid synthesis and greater system improvement than could otherwise be obtained.