Model updating techniques are used to update the finite element model of a structure, so that updated model predicts the dynamics of a structure more accurately. The application of such an updated model in dynamic design demands that it also predicts the effects of structural modifications with a reasonable accuracy. Most of the model updating techniques neglect damping and so these updated models cannot be used for predicting amplitudes of vibration at resonance and antiresonance frequencies. This paper deals with updating of the finite element model using the FRF data with damping identification using complex modal data and its subsequent use for predicting the effects of structure modifications. The updated model is obtained in two steps. In the first step, mass and stiffness matrices are updated using FRF-based model updating method. In the second step, damping is identified using updated mass and stiffness matrices, which are obtained in first step. Structural modifications in terms of mass and beam modifications are then introduced to evaluate the updated model for its usefulness in dynamic design. © 2008 Elsevier Ltd. All rights reserved.