The primary goal in this dissertation is to create a new knowledge, make a transformative influence in the design of networked engineering systems adaptable to ambitious market demands, and to accommodate the Industry 4.0 design principles based on the philosophy that design is fundamentally a decision making process. The principal motivation in this dissertation is to establish a computational framework that is suitable for the design of low-cost and high-quality networked engineering systems adaptable to ambitious market demands in the context of Industry 4.0. Dynamic and ambitious global market demands make it necessary for competitive enterprises to have low-cost manufacturing processes and high-quality products. Smart manufacturing is increasingly being adopted by companies to respond to changes in the market. These smart manufacturing systems must be adaptable to dynamic changes and respond to unexpected disturbances, and uncertainty. Accordingly, a decision-based design computational framework, Design for Dynamic Management (DFDM), is proposed as a support to flexible, operable and rapidly configurable manufacturing processes. DFDM has three critical components: adaptable and concurrent design, operability analysis and reconfiguration strategies. Adaptable and concurrent design methods offer flexibility in selection of design parameters and the concurrent design of the mechanical and control systems. Operability analysis is used to determine the functionality of the system undergoing dynamic change. Reconfiguration strategies allow multiple configurations of elements in the system. It is expected that proposed computational framework results in next generation of networked engineering systems, where tools and sensors communicate with each other via the Internet of Things (IoT), sensors data would be used to create enriched digital system models, adaptable to fast-changing market requirements, which can produce higher quality products over a longer lifetime and at a lower cost. The computational framework and models proposed in this dissertation are applicable in system design, and/or product-service system design. This dissertation is a fundamental research and a way forward is DFDM transition to the industry through decision-based design platform. Decision-based design platform is a step toward new frontiers, Cyber-Physical-Social System Design, Manufacturing, and Services, contributing to further digitization.