Modeling Existing Utilities

I have a couple issues that I'm coming across with modeling utilities. I am following chapter 4 of the training guide for the existing modeling. 

This is a sidewalk job and the DTM we have is limited. We have utility lines from our survey that go in and out of the DTM. So when we model them, they look funky in those areas outside. Is there any way around this?

Also, does this affect our ability to adjust the vertical offsets once we have the verified utility information?

Thank you in advance!