[Slick]

From the Newbie FAQ (very good to read the whole thing):

5.5.6.1 Q: How exactly do I retrofit?
A: a) Create your new design and ensure that the total resources (minerals + organics + rads) is not greater than 150% of the total resources of the original ship. If you want to retrofit to a more expensive design, you need to make multiple steps, each with no more than 150% increase.
b) Move your ship to a sector with a spaceyard, either planet based or on a ship/base works fine.
c) Click on any one of the ships in that sector then click the green triangle (retrofit, scrap, analyze, etc) (Hotkey G) for a new window.
d) Select the ship you want to retrofit, then click the retrofit button.
e) A new window pops up with all available designs that you can retrofit to. select your desired upgrade ship.
f) Click OK.
g) Your ship is now retrofitted and any new components must be repaired by the spaceyard. Once repaired you are good to go. Note that if you retrofit engines and you don't have a Resupply Depot on the planet, you could end up with a ship with 0 supplies because retrofitted engines come with no supplies.

Slick.