MicroStation and AutoCAD use 2D and 3D Cartesian coordinate systems that locate data at fixed coordinates. CAD coordinates are not inherently geographic locations; rather, they are locations relative to a simple geometric origin (0,0,0). To accurately position CAD data or any data in ArcGIS, you need to define the meaning of the coordinates used in the data. This is accomplished by defining a supported Esri spatial reference.
This topic explains CAD coordinate systems and proper spatial reference definitions for CAD data in ArcGIS Pro.
CAD coordinates
MicroStation and AutoCAD use 2D and 3D Cartesian coordinate systems that locate data at fixed coordinates. The x-, y-, and z-coordinates are not inherently geographic locations; they are locations relative to an arbitrary geometric origin (0,0,0). The x-axis can be thought of as an easting direction and the y-axis as a northing direction, but they do not necessarily translate to grid directions in your spatial data.
Although you can create CAD data that corresponds to the x,y coordinates of a projected grid zone, without a supported means to identify which supported Esri coordinate system was used, the data is unlikely to be positioned correctly.
Linear units
Linear units in a CAD file are not dependent on, and they are not defined by, the data's coordinate system. They are a matter of the author deciding what the drawing units represent before creating the data.
As a general rule, all CAD drawings (or models) are drawn at full scale (1:1). One drawing unit can represent any linear unit of measure, such as inches, millimeters, meters, or feet. The decision is typically based on the level of detail the drawing is intended to capture. For example, the units in a drawing of the interior space of a building are likely to be in inches or millimeters, whereas a drawing of a survey plat or a landscape plan is likely to be in feet or meters.
ArcGIS Pro coordinate systems support coordinates in feet or meters. CAD drawings drawn in other units, such as inches or milliliters (sometimes used in architectural applications), must be scaled by georeferencing tools to properly position the data.
CAD data spatial reference (.prj files)
By default, an AutoCAD or MicroStation file does not contain Esri spatial reference information to define a coordinate system. The Esri undefined spatial reference is assumed when no coordinate system definition is detected by ArcGIS Pro for a CAD feature dataset (CAD file). When data is added to a map or scene in ArcGIS Pro with an undefined spatial reference, the coordinates of the data is assumed to be the same coordinate system of the current map or scene's spatial reference, which may or may not be correct. It is recommended that you define a spatial reference for all data added to ArcGIS Pro so that it can be properly positioned.
Spatial reference for AutoCAD files
An AutoCAD file may contain spatial reference information in the .dwg or .dxf file created by the ArcGIS for AutoCAD plug-in application, or as a result of the ArcGIS Desktop Export To CAD geoprocessing tool.
You can associate an Esri spatial reference to any CAD file by including a valid Esri .prj file containing the spatial reference information in the same file folder as the CAD file where the name of the file is the same as the CAD file, but with a .prj extension.
ArcGIS Pro does not support the Autodesk spatial reference information of AutoCAD Map 3D or Civil 3D.
Spatial reference for MicroStation files
You can associate an Esri spatial reference to any CAD file, including MicroStation files, by including a valid Esri .prj file in the same file folder as the CAD file. The included .prj file must have the same name as the CAD file, but with a .prj extension.
Universal CAD and BIM spatial reference (ESRI_CAD.prj)
To define the same spatial reference for every CAD or BIM file in a file folder, you can rename the .prj file containing the desired spatial reference to ESRI_CAD.prj. Then every CAD or BIM file that does not have a defined spatial reference will use the ESRI_CAD.prj file as its spatial reference. This is useful when all of the files in the folder should use the same spatial reference.
CAD data spatial transformation (.wld and .wld3 files)
When the coordinates in a CAD file do not correspond to the included spatial reference due to error or because the CAD file was drawn relative to an unknown position, you can specify a coordinate transformation using an Esri world file. A world file is an ASCII format file with two or three sets of coordinates that define a two point or three point, respectively, linear affine transformation to move scale and rotate the CAD data from where it was drawn to the proper coordinates of the included spatial reference (.prj file).
You can define a coordinate transformation for a CAD or BIM file by including a valid Esri .wld or .wld3 file in the same file folder as the CAD or BIM file. The included world file must have the same name as the CAD or BIM file, but with the .wld or .wld3 file extension.
CAD files must have a valid Esri spatial reference (.prj) before a .wld or .wld3 file can have meaning since the offset values of the world file must correspond to a specific coordinates system as defined in the projection file (.prj).
A .wld file contains two sets of from points and to points to adequately define a 2D affine transformation for 2D CAD data. To properly position 3D CAD or BIM data, you must define a .wld3 file that includes three sets of points.
A .wld or .wld3 file is generated as the result of the CAD or BIM georeferencing tools.
Universal CAD/BIM coordinate transformation (ESRI_CAD.wld and ESRI_CAD.wld3)
To define the same coordinate transformation for every CAD or BIM file in a file folder, rename the .wld or .wld3 file containing the desired coordinate transformation to ESRI_CAD.wld or ESRI_CAD.wld3, respectively. Then ArcGIS Pro will apply that coordinate transformation to every CAD or BIM file in that file folder. This is useful when all the drawings are accurate one to another and all need to be adjusted in the same way.