In LP360 for ArcMap, when attempting to use the Reproject PCT containing a target spatial reference system (SRS) with the vertical defined, the user encounters the message, “Error setting up the transformation: A target vertical coordinate system was specified, but the source vertical coordinate system was not.”
Probable Resolution #1:
ArcMap does not handle SRS with a vertical component very well. If the MXD has been saved, then this error occurs because the layer object that LP360 constructed is then modified by ArcMap and the vertical component is lost. This should only occur when attempting to run LP360 Reproject LAS PCT after saving the MXD. Start a brand new map in ArcMap and run the PCT before saving the MXD to avoid the issue. The user must always use a blank/new project to utilize this function in LP360 for ArcMap.
Probable Resolution #2
Use the standalone LP360 whenever you wish to use the Reproject PCT as the full SRS is handled. The load your reprojected LAS files into LP360 for ArcMap.