Recently, we started experiencing an issue when creating projects in Project Server 2010, where the project creation fails with the following error message.

And If you check the project server queue, you will see the following error:

To give you some background, projects are created from PWA using enterprise project types, and the EPTs have project schedule templates attached to them.

Upon further investigation, we found that this resource has actually been deactivated. Technically, deactivated enterprise resources should automatically  be removed from Enterprise resource Pool, so I was surprised to see this error.

What we found was that in this case there were some named resources added to the project team (no tasks assigned) in the template itself. And it was one of those named resources that got inactivated. The template does not update itself unless it has been recreated by overwriting and hence the deactivation was not recognized by the project template. As a result, the project creation was failing every time. Once the Template has been overwritten with a latest copy (without the deactivated Resource), all was well.

Moral of the story: Avoid putting named resources (even as part of the project team), in a  project schedule template, if you can help it.

Note: In this specific case, there was a specific need to have the named resources in a template, so a process was setup to be followed before deactivating a resource.