The EE function-construction theory, or TAO theory, is a theory about the way subjects (people) perceive the things that surround them. TAO stands for Teleology, Affordance and Ontology. The foundations part starts with an excerpt from Gibson’s theory of affordances. This theory clarifies the subjectivity of affordances. Next, the intended affordances, commonly called functions, of designed things (artefacts) are discussed. Although people are mostly and primarily interested in the functions (affordances) that things may offer them, engineers are also interested in the construction of things. Contrary to function, construction is an objective notion. Related to function is the notion of experience, defined as the sensation that an affordance evokes in the mind. The notion of value is discussed as the intensity of experience, measurable on an ordinal scale. The elaborations part starts with a discussion of constructional models and functional models, their incommensurability and the fundamental difference between constructional and functional decomposition. Next, these findings are illustrated to an example enterprise. The discussions part addresses three topics. The first one is the subjective nature of functional models, and the second one is the mapping from functional to constructional models. The third topic is the importance of ontological modelling. The chapter concludes with a comparison of the TAO theory and the TAO philosophy.