Conventional design process of geotechnical structure implies completion of a design before construction even begins. In order to ensure satisfactory safety factor, conservative design approach uses the most unfavorable conditions that may occur in the rock mass. This increases the cost of construction of geotechnical structures. Therefore, in geotechnical design an observational method that enables design changes during construction of the structure was introduced. This paper describes a design of a rock mass reinforcement and development of observational method. An application and condition of a project that make it suitable for the application of observational methods are discussed. Monitoring and application of measurement equipment in construction of geotechnical structures are described, which represent the basic condition for an application of observational method. Project of the construction of the open pit for a business building in Opatija was used as the example to carry out stress and strain analysis and stability analysis. Comparison of the conventional design approach and observational method is made in this thesis. Results are compared and changes of the project are proposed if during the excavation a better or worse rock mass conditions are found.