In the practice of geotechnical engineering, design decisions are made under a great deal of uncertainty, and the use of deterministic analyses and conventional safety factors can be rather deceptive. Many soil engineering structures can fail by any one of several different mechanisms. The main objective of the presentation is to arrive at optimum and balanced designs for such structures. The procedure is illustrated by analyzing and designing a gravity retaining wall first by conventional, deterministic procedures, and subsequently, by a probabilistic approach. The term safety margin is introduced and defined as the difference between resistance and load, both random variables. It is pointed out that the probability of failure does not depend on the mean value of the safety margin, but on the coefficient of variation. The optimum design for the gravity retaining wall is determined by minimizing the total expected cost considering the uncertainties in the soil parameters and the costs of failure associated with the different failure models.