A system and method for performing functional decomposition of a software design to generate a computer-executable FSM and a graphical representation of the design in a decomposition diagram stored in a program database with source code, test code, and other program data. The method includes searching for pre-existing software modules that meet program design requirements. Modules needing work are displayed on Gantt or PERT charts as tasks, and may be annotated with start dates, and completion dates. Percent complete of the design is automatically generated and updated, and may be displayed on the charts. The decomposition is automatically used to introduce error detection states into the FSM for recognizing invalid states and saving checkpoints, and for recognizing and repairing both race conditions and deadlock conditions in the design.