Creating Terrain Model from Corridor Element and Complex Terrains

All,

I followed the steps in this video (http://www.youtube.com/watch?v=8UON7jngtRU) to create a terrain model from a corridor.  However, the terrain model that was generated does not follow the surface of the corridor (see screenshot below - the light blue line is the terrain).  Does anyone have any ideas about where I may have went wrong?

Also, more generally speaking, if anyone has any best practices or recommendations on the best way to create an overall surface terrain from a model several corridors, civil cells, and other elements, please share!  So far, I've been creating several smaller terrains for each object and merging them together into a complex terrain.  That seems to work okay, but it can get pretty complex and convoluted.  Is there a better way?

Thanks for your help!

Matt