When viewing the engineering profile with a terrain model applied, the elevation displayed on the profile appears incorrect, with a jagged appearance. The standard profile doesn't show the same issue.
This is a known issue (reference # 1033837) related to the use of taps and laterals in the profile. This has been resolved with an update to version 10.02.01.04 of the above products, and included in all later releases. Please contact Bentley Technical Support for further assistance.
Using Downstream Trace and Digital Terrain Models