Diagnostics Server query



I have a Performance Center Production environment which is v12.50 and a Performance Center Sandbox environment which is v12.55.

We have some end-users testing and evaluating 12.55 before we upgrade to Production.

One of the users has reported he is getting this error message when he goes 

Test Scenario-> Diagnostics:  "Warning: A Diagnostics server is not defined for this project"

So in Lab Manager I checked the project settings and I see that indeed there is no diagnostic server specified for his project.


However, when I look in Production project settings I also see that there is no diagnostic server specified for hsi project. Yet he does not get the same error.

Can anyone please explain why this is the case?