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Despite a specific warning to a contractor to install new pilings in exactly the same place as rotted wood pilings to avoid damaging structures under the river at the Kinzie Street bridge, the old pilings were not removed and the pilings were pounded in a few feet away, city officials said Wednesday.

The installation and placement of the new pilings are being investigated as the possible cause of a crack in an underground tunnel wall that finally split open Monday morning and unleashed a torrent of water that flooded a tunnel system under downtown Chicago.

And though city officials now say the old pilings were not removed, weekly job summaries signed by a city engineer assigned to monitor the work at the Kinzie Street bridge by the contractor, Great Lakes Dredge & Dock Co. of Oak Brook, detail five days of work that consisted of removing old pilings.

The contract for the work stipulated that new pilings, which are buffers to protect the bridge from barges, be put in the same place as the rotted wood bundles.

”The contractor shall not drive the piles at any other location than that specified by the city,” the city contract said.

”The position of the piles shall not be changed to any degree, as even slight position changes may cause serous damage to various underground cables and structures,” the contract stated.

City officials said Wednesday that instead, new pilings were driven into the riverbed next to the old pilings.

”The old pilings are still there,” said David Mosena, Mayor Richard Daley`s chief of staff. ”It`s under investigation.”

A spokesman for Great Lakes on Wednesday reiterated a one-paragraph statement the company had released earlier in the week, saying that the company completed the work six months ago, that the work had been accepted as satisfactory and that the company was waiting to hear from the city.

”At this point we are going to leave it at that,” said Richard Adams, a Great Lakes spokesman. ”We have no comment.”

John LaPlante, the former acting chief of the city`s Department of Transportation who was sacked by Daley on Tuesday, said Great Lakes did not remove the old pilings because a boathouse built after the bridge was completed obstructed access to the contractor`s construction equipment.

”They could have told us, `We can`t put them there,` ” LaPlante said.

The company sank new pilings 6 feet away from the old timber bundles without consulting city maps that would have told of the underground tunnel system, LaPlante said.

LaPlante said that after the flooding began, he ordered a search of records in the Department of Streets and Sanitation for any requests for maps by Great Lakes. No requests were found, he said.

”We have no record of them asking,” LaPlante said. ”The contract required them to determine if there are any underground utilities.”

Mosena said the city is looking at the possibility that Great Lakes deviated from the contractual requirement to remove the bundles and place new pilings in exactly the same place-a measure to ensure the safety of buried cables and the city`s decades-old coal tunnel system.

The tunnel that broke open is 14 to 19 feet below the bottom of the river at the Kinzie Street bridge.

When workers on Monday began dumping rocks and sandbags and quick-setting cement into the gaping hole to try to plug the leak, several wooden timbers were visible just a few feet from the site of the eddy created by the suction of the leak. The tips of those timbers peeked a few inches above the river waves.

Mosena said the new pilings were set ”next to or near the old pilings.” In their location, the pilings placed by Great Lakes ”reached to the tunnel,” Mosena said.

He said he was unaware if Great Lakes asked for underground maps or a variance in its contract to leave the old pilings in the river.

”That is all a part of the investigation,” he said.

The weekly job progress reports filed with the Illinois Department of Transportation bore the signature of the field engineer for the project, who is an employee of the city`s Public Works Department, according to copies obtained Wednesday from the Illinois Department of Transportation. The progress reports detailed in shorthand the 16 days during September 1991 when the daily activity consisted of ”removing old piles nex Kinzie St.”

City officials said they could not explain the discrepancy raised by those reports, saying only that, ”It raises a big eyebrow.”

The only change in the original contract that was noted in the records submitted to the state Transportation Department called for substituting 55-foot wood poles for 50-foot-long steel tubing. That change was allowed because of a lack of availability of the pipe and unspecified concerns by the U.S. Coast Guard, state records show.

Great Lakes was awarded the $335,640 city contract in May 1990 to replace 14 bundles of rotted wooden pilings at five bridge sites along the river.

The hexagonal bundles of 55-foot-long wooden poles, also known as

”timber dolphins” in the martime-construction industry, contain 37 timber poles. The bundles are tightly wrapped by heavy steel chains and pounded into the riverbed by powerful barge-mounted hammers.

The five contracted projects began in June 1990 and continued through the summer, with the Kinzie job being the last to be completed just after Labor Day.

Mosena said Wednesday that all of the construction projects covered by the Great Lakes contract were under investigation.

Representatives of Great Lakes spoke Wednesday with Kelly R. Welsh, Chicago corporation counsel, according to Daley.

The language of the city`s contract regarding underground hazards warned that Great Lakes would be held responsible for damages.

”Should the contractor damage any of these cable or structures through carelessness or improper positioning,” the contract said, ”he will be obliged to repair such damages and replace such materials at his own expense.”

State officials who later approved funding for the project said the language was added with the express intent of covering possible damage to the city`s underground tunnel system.

”The city was concerned about the tunnel system, and they made statements to that effect in the contract,” said Feroz Nathani, bureau chief of local roads and streets for the state Transportation Department.

”The contractor was responsible for all damage to adjacent underground structures,” Nathani said. ”If indeed the piling construction caused this, they would be responsible.”