Okay, so there is a SQLCMD Mode for the query window in Management Studio for SQL Server. However, what I didn’t know was that there is also a SQLCMD Mode for the Transact-SQL Editor in Visual Studio 2010. Apparently, in order to compile any SQLCMD syntax inside of a script, such as the post deployment script for a database project, you must have SQLCMD turned on to avoid any parser errors. Cheers!