A knowledge system has a hierarchical knowledge base comprising a functional decomposition of a set of elements into subsets over a plurality of hierarchical levels, a plurality of predefined functions or conditions of the elements within the subsets of a plurality of the hierarchical levels, and a predefined set of operations to perform on a user-defined set of elements responsive to the functional knowledge base. Preferably, the knowledge base is defined declaratively by assigning parent sets to offspring subsets to define the hierarchy, by indicating the conditions of the subsets which satisfy the predefined functions and by writing task blocks in an imperative language defining the sequence of operations to perform on the user-defined set of elements. Preferably the operations include matching, configuring and expanding the user-defined set of elements into the defined subsets of individual elements and evaluating the predefined functions, and the operations are executed recursively. In a specific embodiment the elements are available components for a system or item of manufacture, and the subsets of elements are sub-assemblies or functionally related components. The predefined functions define condition-action constraints to insure that the sub-assemblies have compatible components. Such a knowledge system has general applicability, is easy to maintain and incrementally modify, has transparent representation of the functional decomposition and the configuration operations, and provides explanation for an assessment of the configuration.