An engineering diffractometer designed to solve many problems in materials science and engineering including investigations of stresses and crystallographic structures within engineering components is now being developed at J-PARC project. This instrument views a decoupled-poisoned liquid H2 moderator providing neutrons with good symmetrical diffraction profiles in the acceptable wavelength range. The primary flight path and the secondary flight path are 40 m and 2.0 m, respectively, for 90 degree scattering detector banks. A curved supermirror neutron guide will be installed to avoid intensity loss due to the long flight path and to reduce backgrounds from fast neutrons and gamma rays. Therefore, stress measurements with sufficient accuracies in many engineering studies are quite promising. The optimization of this instrument has been performed with a Monte Carlo simulation, and an appropriate resolution of less than 0.2 % in d/d has been confirmed. A prototyped radial collimator to define a gauge width of 1 mm has been designed and manufactured. From performance tests conducted at the neutron diffractometer for residual stress analysis RESA in JRR-3 of Japan Atomic Energy Agency, the normal distribution with a full width at half maximum of 1 mm was obtained in a good agreement with the simulation.