With over 90% of the country’s total electricity generation capacity generated by hydropower plants, Nepal is heavily dependent on hydro resources to meet its energy demands. Best use of water using the shortest and the most reliable water ways through steep mountain terrains with underground tunnels can help harness this gift of nature in the most efficient way. However, there are numerous risks and uncertainties involved with underground construction works. The major technical challenges involved in underground tunneling are stress induced instabilities, water pressure and overwhelming cost during construction. In case of Himalaya, due to active tectonic movements, rock masses are highly stressed and fragile. They are not capable to withstand high in-situ stress. These rocks are soft and plastic. Most often, block/wedge failures and plastic deformation are instability issues in these rock masses.Block/wedge failures and plastic deformation analysis have been carried out with reference to tunnel instabilities issues witnessed along headrace tunnel (HRT) at Kulekhani-III hydroelectric project (KL-III HEP). HRT is constructed along rock masses such as marble, schist, quartzite, phyllite and dolomite. In addition to that, the tunnel crosses an active major thrust (Mahabharat thrust) and has been exposed to considerable amount of block falls and plastic deformation during tunnel excavation.The objective of this thesis is evaluation and interpretation of various methods to assess block/wedge failures and plastic deformation along HRT at KL-III HEP. It is necessary to have a clear idea about factors triggering tunnel instabilities in weak rock condition. The scope of thesis is categorized into two main sections. Block/wedge falls have been evaluated with kinematic limit equilibrium (KLE) method and in UnWedge 4.0. In UnWedge, both deterministic and probabilistic methods have been applied to access the instability. For plastic deformation, empirical methods by Singh (1992), Goel (1995) and Q-system (2000) are used. Semi-empirical methods by Jethwa (1984), Hoek and Marinos (2000) and Panthi and Shrestha (2018) have been used. Squeezing analysis and support pressure investigation have been done using the analytical method called Convergence confinement method by Carranza-Torres and Fairhurst (2000) and with improvements by Vlachopoulos and Diederichs (2009). An uncertainty analysis to access rock mass quality and plastic deformation have been included using Octave 5.1. Numerical investigation using sophisticated 2D and 3D finite element softwares, viz. Rocscience2 & Rocscience3 are included in the thesis.Weak, fractured rock mass with high in-situ stress is the main reason for plastic deformation. In addition to that, presence of active thrust along HRT has increased the degree of wedge failures. The above mentioned methods use stress condition, rock mass quality and strength to evaluate instability. Results from analysis along HRT reveal the fact that tunneling in weak and fragile rock mass is a complicated task involving several tunnel instabilities. Thus, tunneling in such condition requires good planning and considerations.