First the module(s) to be reverse engineered needs to be in the ship's cargo bay.
Then just go to Ship -> Manufacture -> Mark Upgrade and when selecting a module that can be reverse engineered, you will be presented with the options.
Please note that only artefacts, illegal modules, pledge modules, ancient modules etc. can be reverse engineered.
To be able to upgrade, you need two modules and the required tech level.
Have fun