“Method not found error” when attempting to add a new item into K2 Studio project

The other day I was about to build some tiny K2 test project using old-fashioned thick designer UI K2 Studio which I still prefer to use whenever I need to build some little K2 process. Unfortunately I bumped into this error: Error message politely informs us about this: Method not found: ‘Microsoft. Build. BuildEngine BuildItem … “Method not found error” when attempting to add a new item into K2 Studio project