A large ground-based astronomical telescope project, like the Thirty Meter Telescope (TMT), is rivaling space projects in technical complexity, design and construction time span, budget, as well as organizational diversity and geographical distribution. A unique challenge in large ground based projects is implementing appropriate systems engineering methods and tools in the absence of the strong institutional backdrop that space projects can rely on. This paper provides a critical overview of the established system engineering practice in the TMT project, including requirements engineering, document and configuration control, as well as performance allocation and estimation. In particular, we introduce a new performance metric, the Point Source Sensitivity (PSS), and show how it is superior to the 80% enclosed energy diameter measure. The overall strategy for estimating the performance of TMT is outlined, showing how the various elements of performance modeling, reported in detail in other papers, fit together to provide a probabilistic assessment of the achievable image quality of the observatory. An overview of the estimated system performance is presented with critical analysis of the major factors limiting the seeing limited observations.© (2008) COPYRIGHT SPIE--The International Society for Optical Engineering. Downloading of the abstract is permitted for personal use only.