Since you and your Org are preparing to upgrade from PSA v3 to Project Operations given that you are covered in terms of what licensing you need, the first step is to try upgrading your environments to PO.

This upgrade operations needs to ensure you have clean data in your environment before you could upgrade. Hence, these validations will cause failure in upgrading the PSA on the selected environment.

Let’s see what needs to be done to identify and rectify the failures.

Upgrade Failure

Typically, you’ll see below failure if you are trying to upgrade from PSA to PO in the Power Platform Admin Center –

1. You’ll see that the installation has failed.
   
   
2. Now you can directly go in Project Service.
   

Error Logs in Project Service

Now, in Project Service, you can do the below –

1. You can see the Upgrade Logs and sort the Started field by Descending to make the latest one appear on top.
   You’ll notice a Failure status entry.
   
   
   
2. When you open it up, it’ll have the details. You’ll see the upgrade entry as shown below. You need to open it.
   
   
3. Once you open this Upgrade Version record as shown above, you’ll need to sort the Steps as shown below to show all the Failure status records first.
   
   
4. Once you open one of the failed ones, you’ll be able to see why the upgrade failed on the Upgrade Step record.
   
   
   These error messages are self-explanatory and you should be able to take corrective action by going through them and working to resolve given you have functional knowledge of Dynamics 365 PSA/CRM.
   
5. As you resolve the issues as you find them, you should eventually get to upgrading the Project Operations successfully once all data dependent validation issues are resolved.

Hope this helps!