A construction algorithm for the plant layout problem is presented. The problem is formulated as a generalized assignment problem with the objective of minimizing total movement costs. The solution algorithm is a heuristic that utilizes an analogy to the special case of locating one item within a warehouse repetitively for placing and constructing departments. The procedure is sensitive to the departmental areas and approaches the problem as one of area placement. The algorithm provides a large degree of regularity in departmental shape and overall layout outline without having to pre-specify any particular shape. The compact and simple computational nature of the algorithm makes it suitable for adaption to an interactive microcomputer environment.