diff --git a/build/org.eclipse.cdt.managedbuilder.core.tests/tests/org/eclipse/cdt/projectmodel/tests/ProjectModelTests.java b/build/org.eclipse.cdt.managedbuilder.core.tests/tests/org/eclipse/cdt/projectmodel/tests/ProjectModelTests.java
index f83cafd0fb6..d9baea44d6e 100644
--- a/build/org.eclipse.cdt.managedbuilder.core.tests/tests/org/eclipse/cdt/projectmodel/tests/ProjectModelTests.java
+++ b/build/org.eclipse.cdt.managedbuilder.core.tests/tests/org/eclipse/cdt/projectmodel/tests/ProjectModelTests.java
@@ -357,7 +357,7 @@ public class ProjectModelTests extends TestCase implements IElementChangedListen
 		cfgDes = cfgDess[0];
 		rf = cfgDes.getRootFolderDescription();
 		settings = rf.getLanguageSettings();
-		ICLanguageSettingEntry updatedEntries[] = null;
+		ICLanguageSettingEntry updatedEntries[] = new ICLanguageSettingEntry[0];
 		for(int i = 0; i < settings.length; i++){
 			ICLanguageSetting setting = settings[i];
 			ICLanguageSettingEntry[] entries = setting.getSettingEntries(ICLanguageSettingEntry.INCLUDE_PATH);
diff --git a/build/org.eclipse.cdt.managedbuilder.core/src/org/eclipse/cdt/managedbuilder/internal/core/Builder.java b/build/org.eclipse.cdt.managedbuilder.core/src/org/eclipse/cdt/managedbuilder/internal/core/Builder.java
index 82eacbd8861..92466a86eca 100644
--- a/build/org.eclipse.cdt.managedbuilder.core/src/org/eclipse/cdt/managedbuilder/internal/core/Builder.java
+++ b/build/org.eclipse.cdt.managedbuilder.core/src/org/eclipse/cdt/managedbuilder/internal/core/Builder.java
@@ -55,11 +55,13 @@ import org.eclipse.cdt.managedbuilder.makegen.IManagedBuilderMakefileGenerator;
 import org.eclipse.cdt.managedbuilder.makegen.IManagedBuilderMakefileGenerator2;
 import org.eclipse.cdt.managedbuilder.makegen.gnu.GnuMakefileGenerator;
 import org.eclipse.core.resources.IProject;
+import org.eclipse.core.resources.IncrementalProjectBuilder;
 import org.eclipse.core.runtime.CoreException;
 import org.eclipse.core.runtime.IConfigurationElement;
 import org.eclipse.core.runtime.IExtension;
 import org.eclipse.core.runtime.IExtensionPoint;
 import org.eclipse.core.runtime.IPath;
+import org.eclipse.core.runtime.NullProgressMonitor;
 import org.eclipse.core.runtime.Path;
 import org.eclipse.core.runtime.Platform;
 import org.eclipse.core.runtime.PluginVersionIdentifier;
@@ -377,8 +379,10 @@ public class Builder extends BuildObject implements IBuilder, IMatchKeyProvider
 		if(builder.customizedEnvironment != null)
 			customizedEnvironment = (HashMap)builder.customizedEnvironment.clone();
 		appendEnvironment = builder.appendEnvironment;
-		if(!getBuildPath().equals(builder.getBuildPath()))
-			setBuildPath(builder.getBuildPath());
+		if(isBuildPathEditable()){
+			if(!getBuildPath().equals(builder.getBuildPath()))
+				setBuildPath(builder.getBuildPath());
+		}
 		if(builder.customBuildProperties != null)
 			customBuildProperties = (HashMap)builder.customBuildProperties.clone();
 
@@ -1728,31 +1732,62 @@ public class Builder extends BuildObject implements IBuilder, IMatchKeyProvider
 		return path;
 	}
 	
+	private boolean isBuildPathEditable(){
+		return !isManagedBuildOn();
+	}
+	
 	public String getDefaultBuildPath(){
 		Configuration cfg = (Configuration)getConfguration();
-		String path = null;
+		IPath buildPath;
+		String result;
+		
+//		Builder extBuilder = (Builder)ManagedBuildManager.getExtensionBuilder(this);
+//		String attr = extBuilder.getBuildPathAttribute();
 		if(cfg != null){
-			if(isManagedBuildOn()){
-				path = cfg.getName();
-			}
-			
 			if(!isExtensionElement() && !cfg.isPreference()){
 				IProject project = cfg.getOwner().getProject();
-				IPath buildPath = project.getFullPath();
-				IStringVariableManager mngr = VariablesPlugin.getDefault().getStringVariableManager();
-				if(path != null)
-					buildPath = buildPath.append(path);
-
-				path = buildPath.toString();
-				path = mngr.generateVariableExpression("workspace_loc", path); //$NON-NLS-1$
+//				if(attr == null){
+					if(isManagedBuildOn()){
+						IManagedBuilderMakefileGenerator gen = getBuildFileGenerator();
+						if(gen instanceof IManagedBuilderMakefileGenerator2){
+							((IManagedBuilderMakefileGenerator2)gen).initialize(IncrementalProjectBuilder.FULL_BUILD, cfg, this, new NullProgressMonitor());
+						} else {
+							gen.initialize(project, ManagedBuildManager.getBuildInfo(project), new NullProgressMonitor());
+						}
+						
+						buildPath = gen.getBuildWorkingDir();
+						if(buildPath == null)
+							buildPath = new Path(cfg.getName());
+					} else {
+						buildPath = Path.EMPTY;
+					}
+//				} else {
+//					buildPath = new Path(attr);
+//				}
+				
+				if(!buildPath.isAbsolute()){
+					buildPath = project.getFullPath().append(buildPath);
+					IStringVariableManager mngr = VariablesPlugin.getDefault().getStringVariableManager();
+	
+					result = buildPath.toString();
+					result = mngr.generateVariableExpression("workspace_loc", result); //$NON-NLS-1$
+				} else {
+					result = buildPath.toString();
+				}
+			} else {
+				if(isManagedBuildOn()){
+					result = cfg.getName();
+					if(result == null)
+						result = ""; //$NON-NLS-1$
+				} else {
+					result = ""; //$NON-NLS-1$ 
+				}
 			}
+		} else {
+			result = ""; //$NON-NLS-1$ 
 		}
 		
-		if(path == null){
-			path = "";  //$NON-NLS-1$
-		}
-		
-		return path;
+		return result;
 	}
 	
 /*	public boolean isWorkspaceBuildPath(){
diff --git a/build/org.eclipse.cdt.managedbuilder.core/src/org/eclipse/cdt/managedbuilder/internal/envvar/MbsEnvironmentSupplier.java b/build/org.eclipse.cdt.managedbuilder.core/src/org/eclipse/cdt/managedbuilder/internal/envvar/MbsEnvironmentSupplier.java
index b94e971e9d3..ea22af4897c 100644
--- a/build/org.eclipse.cdt.managedbuilder.core/src/org/eclipse/cdt/managedbuilder/internal/envvar/MbsEnvironmentSupplier.java
+++ b/build/org.eclipse.cdt.managedbuilder.core/src/org/eclipse/cdt/managedbuilder/internal/envvar/MbsEnvironmentSupplier.java
@@ -21,7 +21,6 @@ import org.eclipse.cdt.managedbuilder.envvar.IBuildEnvironmentVariable;
 import org.eclipse.cdt.managedbuilder.envvar.IEnvironmentVariableSupplier;
 import org.eclipse.core.resources.IResource;
 import org.eclipse.core.runtime.IPath;
-import org.eclipse.core.runtime.Path;
 
 /**
  * This is the Environment Variable Supplier used to supply variables
@@ -30,10 +29,10 @@ import org.eclipse.core.runtime.Path;
  * @since 3.0
  */
 public class MbsEnvironmentSupplier implements IEnvironmentVariableSupplier {
-	private static final String fVariableNames[] = new String[]{
-		"CWD",	//$NON-NLS-1$
-		"PWD"	//$NON-NLS-1$
-	};
+//	private static final String fVariableNames[] = new String[]{
+//		"CWD",	//$NON-NLS-1$
+//		"PWD"	//$NON-NLS-1$
+//	};
 	
 	/* (non-Javadoc)
 	 * @see org.eclipse.cdt.managedbuilder.envvar.IEnvironmentVariableSupplier#getVariable()
@@ -76,14 +75,14 @@ public class MbsEnvironmentSupplier implements IEnvironmentVariableSupplier {
 	 */
 	public IEnvironmentVariable[] getVariables(Object context) {
 		if(context instanceof IConfiguration){
-			List variables = new ArrayList(fVariableNames.length);
-			for(int i = 0; i < fVariableNames.length; i++){
-				IBuildEnvironmentVariable var = getConfigurationVariable(fVariableNames[i],(IConfiguration)context);
-				if(var != null)
-					variables.add(var);
-			}
-			if(variables.size() == 0)
+			List variables = new ArrayList(2);
+			IBuildEnvironmentVariable var = getConfigurationVariable("CWD",(IConfiguration)context);
+			if(var != null){
+				variables.add(var);
+				variables.add(new BuildEnvVar("PWD", var.getValue(), IBuildEnvironmentVariable.ENVVAR_REPLACE, null));
+			} else {
 				return null;
+			}
 			return (IEnvironmentVariable[])variables.toArray(new IBuildEnvironmentVariable[variables.size()]);
 		}
 		return null;