how to convert water data from attached cad file to GIS with projection

It looks like the data is in a local coordinate system, so unless you know how that relates to a geographic coordinate system you're out of luck with regards to the projection.

The rest of the process itself is simple, generate a workspace from DGN to whichever GIS format you want. Every DGN level will end up being a "layer" in GIS (terminology might differ from format to format)

Hi @adnan_abbasi,

Supplementing redgeographics' answer, we have some resources that might be helpful for this project, including a tutorial on taking CAD to GIS, which converts from DGN to Geodatabase. There's also a few more articles under the tutorial Microstation Transformations if you're interested to take a look there as well. As for the coordinate system, if you know what it is, you can try the CoordinateSystemSetter, and if you need to reproject it, a Reprojector transformer would be a good one to check out.