Pile foundations are used extensively around the world to support both inland and offshore structures, including important structures such as nuclear plants and oil drilling platforms. Pile foundations are known to resist higher compression and uplift loading as compared to shallow foundations. The common factor in resisting the compression and the tensile loading is the friction, which takes place between the pile and the soil.  Pile foundations can be categorized as bored and driven piles. Bored piles installed in sand are known to provide relatively low capacity as compared to driven piles under the same condition. This is due the effect of the pile driving process.  The estimation of the shaft resistance of driven piles remains empirical at best. The changes in the in situ stress levels as a result of pile installation are quite often overestimated/underestimated leading to unsafe/uneconomic design of the foundations. The objective of this study is to examine the changes in the in situ stresses during the pile driving process, and accordingly to predict the pile capacity. In order to achieve these objectives, numerical model is developed to simulate the process of pile installation and link the cavity expansion to the pile installation and pile diameter. During this research program the changes in the soil mass due to pile installation will be recorded. Furthermore, the changes of the OCR around the pile will be examined and its effects on the earth pressure acting on the pile's shaft will be evaluated. Based on the results of the present investigation, design theory is proposed to account for the effect of pile diameter during installation in dry sand.  In order to achieve these objectives, a numerical model utilizing the finite element method of analysis combined with the theory of cavity expansion is developed. This model is capable of predicting the magnitude and the distribution of the coefficient earth pressure acting on the pile's shaft and accordingly the overconsolidation ratio. Based on the result obtained from the numerical model, an analytical model was developed to incorporate the findings observed from the numerical model. The analytical model will be then presented in the form of design procedure and design charts for practical use. The theories developed herein compared well with the available laboratory and field experimental data