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Use of Computer Aided Engineering (CAE) tools for virtual validation has become an essential part of every product development process. Using CAE tools, accurate prediction of potential failure locations is possible even before building the proto. This paper presents a detailed case study of virtual validation of Backhoe Loader (BHL) dipper arm using CAE tools (MBD: Multi Body Dynamics and FEA: Finite Element Analysis) and comparison of simulation results with test data. In this paper, we have illustrated the modelling of Backhoe Loader in MSc ADAMS software. The detail ADAMS model was created and validated. The component mass, Center of Gravity (C.G) and Mass Moment of Inertia (MOI) was taken from CAD data. Trenching is simulated by operating the different hydraulic cylinders of the BHL. Loader arm cylinders and stabilizer cylinders are operated to lift the machine tires above the ground level.