ABSTRACT The paper describes work which is being carried out as part of a collaborative research programme between the British warshipbuilding company, Yarrow Shipbuilders Ltd., and the Department of Naval Architecture at The University of Newcastle upon Tyne, England. Recent developments in CAD have made available to the designer a wide range of hardware and software which encourage the application of interactive, graphics‐based design procedures. Such methods can be of significant benefit in modern warships design where the optimal utilization of ‘space’ is a primary design goal. Two facets which influence and control space management systems are the adjacency of functional areas and the environment into which a space is to be placed. Recent work concerned with the geometric representation and manipulation of architectural arrangements has been adapted for use in marine vehicle design. An optimal design procedure which utilizes the theory of fuzzy sets is used to achieve the general layout of space which allows the delineation of the main compartments of a vessel. The hull envelope can be generated using a surface generation module or by using previously faired basis ship offsets held in a data base. Having defined the compartmental configuration of the functional spaces the next level of design is concerned with a more detailed consideration of compartments, or groups of compartments and the equipment and systems they contain. Equipment is defined in terms of ergonomic envelopes, geometry and connectivity of services etc. The attributes of a 3‐D graphics workstation are used, in conjunction with an equipment library, to provide an effective detailed design procedure. The layout of equipment in spaces usually concerns the achievement of goals which conflict or have different priorities. The use of optimal goal programming techniques is suggested as a way of solving the multi‐objective problem. As illustrative examples of the method the layout of the victual complex and dining areas for a small warship are generated.