diff --git a/src/build/buildTask.ts b/src/build/buildTask.ts
index 2916a1e3a..83ae95109 100644
--- a/src/build/buildTask.ts
+++ b/src/build/buildTask.ts
@@ -148,7 +148,7 @@ export class BuildTask {
 
       const sdkconfigFile = await getSDKConfigFilePath(this.currentWorkspace);
       if (compilerArgs.indexOf("SDKCONFIG") === -1) {
-        compilerArgs.push(`-DSDKCONFIG=${sdkconfigFile}`);
+        compilerArgs.push(`-DSDKCONFIG='${sdkconfigFile}'`);
       }
 
       const sdkconfigDefaults =
diff --git a/src/espIdf/menuconfig/confServerProcess.ts b/src/espIdf/menuconfig/confServerProcess.ts
index b1bca4e7a..0013b0f98 100644
--- a/src/espIdf/menuconfig/confServerProcess.ts
+++ b/src/espIdf/menuconfig/confServerProcess.ts
@@ -226,7 +226,7 @@ export class ConfserverProcess {
       (idfConf.readParameter("idf.sdkconfigDefaults") as string[]) || [];
 
     if (reconfigureArgs.indexOf("SDKCONFIG") === -1) {
-      reconfigureArgs.push(`-DSDKCONFIG=${ConfserverProcess.instance.configFile}`)
+      reconfigureArgs.push(`-DSDKCONFIG='${ConfserverProcess.instance.configFile}'`)
     }
 
     if (
@@ -346,7 +346,7 @@ export class ConfserverProcess {
       (idfConf.readParameter("idf.sdkconfigDefaults") as string[]) || [];
 
     if (confServerArgs.indexOf("SDKCONFIG") === -1) {
-      confServerArgs.push(`-DSDKCONFIG=${this.configFile}`)
+      confServerArgs.push(`-DSDKCONFIG='${this.configFile}'`)
     }
 
     if (
diff --git a/src/espIdf/reconfigure/task.ts b/src/espIdf/reconfigure/task.ts
index bc54b9ab5..2e3c666d1 100644
--- a/src/espIdf/reconfigure/task.ts
+++ b/src/espIdf/reconfigure/task.ts
@@ -74,7 +74,7 @@ export class IdfReconfigureTask {
 
     const sdkconfigFile = await getSDKConfigFilePath(this.curWorkspace);
     if (reconfigureArgs.indexOf("SDKCONFIG") === -1) {
-      reconfigureArgs.push(`-DSDKCONFIG=${sdkconfigFile}`);
+      reconfigureArgs.push(`-DSDKCONFIG='${sdkconfigFile}'`);
     }
 
     const sdkconfigDefaults =
diff --git a/src/project-conf/index.ts b/src/project-conf/index.ts
index d5531f51d..79d864edc 100644
--- a/src/project-conf/index.ts
+++ b/src/project-conf/index.ts
@@ -16,9 +16,10 @@
  * limitations under the License.
  */
 
-import { ExtensionContext, Uri } from "vscode";
+import * as path from "path";
+import { ExtensionContext, Uri, StatusBarItem } from "vscode";
 import { ESP } from "../config";
-import { pathExists, readJson, writeJson } from "fs-extra";
+import { pathExists, readJson, writeJson, ensureDir } from "fs-extra";
 import { ProjectConfElement } from "./projectConfiguration";
 
 export class ProjectConfigStore {
@@ -58,32 +59,53 @@ export async function getProjectConfigurationElements(workspaceFolder: Uri) {
 
   const projectConfElements: { [key: string]: ProjectConfElement } = {};
 
-  Object.keys(projectConfJson).forEach((elem) => {
-    projectConfElements[elem] = {
-      build: {
-        compileArgs: projectConfJson[elem].build?.compileArgs,
-        ninjaArgs: projectConfJson[elem].build?.ninjaArgs,
-        buildDirectoryPath: projectConfJson[elem].build?.buildDirectoryPath,
-        sdkconfigDefaults: projectConfJson[elem].build?.sdkconfigDefaults,
-        sdkconfigFilePath: projectConfJson[elem].build?.sdkconfigFilePath
-      },
-      env: projectConfJson[elem].env,
-      flashBaudRate: projectConfJson[elem].flashBaudRate,
-      monitorBaudRate: projectConfJson[elem].monitorBaudRate,
-      openOCD: {
-        debugLevel: projectConfJson[elem].openOCD?.debugLevel,
-        configs: projectConfJson[elem].openOCD?.configs,
-        args: projectConfJson[elem].openOCD?.args,
-      },
-      tasks: {
-        preBuild: projectConfJson[elem].tasks?.preBuild,
-        preFlash: projectConfJson[elem].tasks?.preFlash,
-        postBuild: projectConfJson[elem].tasks?.postBuild,
-        postFlash: projectConfJson[elem].tasks?.postFlash,
-      },
-    } as ProjectConfElement;
-  });
+  await Promise.all(
+    Object.keys(projectConfJson).map(async (elem) => {
+      const buildConfig = projectConfJson[elem].build;
+      let buildDirPath: string;
+      const userBuildDir = buildConfig?.buildDirectoryPath;
+      if (userBuildDir) {
+        buildDirPath = (await resolveConfigPaths(
+          workspaceFolder,
+          userBuildDir
+        )) as string;
+      }
 
+      // Ensure directory is created for the resolved path
+      if (buildDirPath) {
+        await ensureDir(buildDirPath);
+      }
+      projectConfElements[elem] = {
+        build: {
+          compileArgs: buildConfig?.compileArgs,
+          ninjaArgs: buildConfig?.ninjaArgs,
+          buildDirectoryPath: buildDirPath,
+          sdkconfigDefaults: (await resolveConfigPaths(
+            workspaceFolder,
+            buildConfig?.sdkconfigDefaults
+          )) as string[],
+          sdkconfigFilePath: (await resolveConfigPaths(
+            workspaceFolder,
+            buildConfig?.sdkconfigFilePath
+          )) as string,
+        },
+        env: projectConfJson[elem].env,
+        flashBaudRate: projectConfJson[elem].flashBaudRate,
+        monitorBaudRate: projectConfJson[elem].monitorBaudRate,
+        openOCD: {
+          debugLevel: projectConfJson[elem].openOCD?.debugLevel,
+          configs: projectConfJson[elem].openOCD?.configs,
+          args: projectConfJson[elem].openOCD?.args,
+        },
+        tasks: {
+          preBuild: projectConfJson[elem].tasks?.preBuild,
+          preFlash: projectConfJson[elem].tasks?.preFlash,
+          postBuild: projectConfJson[elem].tasks?.postBuild,
+          postFlash: projectConfJson[elem].tasks?.postFlash,
+        },
+      } as ProjectConfElement;
+    })
+  );
   return projectConfElements;
 }
 
@@ -99,3 +121,30 @@ export async function saveProjectConfFile(
     spaces: 2,
   });
 }
+
+/**
+ * Resolves config paths to absolute paths if relative, preserves if already absolute.
+ * Handles both single path string or array of paths.
+ */
+async function resolveConfigPaths(
+  workspaceFolder: Uri,
+  paths?: string | string[]
+): Promise<string | string[]> {
+  if (!paths) return undefined;
+
+  if (Array.isArray(paths)) {
+    return Promise.all(
+      paths.map(async (configPath) => {
+        if (path.isAbsolute(configPath)) {
+          return configPath;
+        }
+        return Uri.joinPath(workspaceFolder, configPath).fsPath;
+      })
+    );
+  }
+
+  if (path.isAbsolute(paths)) {
+    return paths;
+  }
+  return Uri.joinPath(workspaceFolder, paths).fsPath;
+}
diff --git a/src/statusBar/index.ts b/src/statusBar/index.ts
index eaa37ee8e..230b7d524 100644
--- a/src/statusBar/index.ts
+++ b/src/statusBar/index.ts
@@ -16,6 +16,7 @@
  * limitations under the License.
  */
 
+import * as path from "path";
 import {
   env,
   StatusBarAlignment,
@@ -31,6 +32,7 @@ import { ESP } from "../config";
 import { CommandItem } from "../cmdTreeView/cmdTreeDataProvider";
 import { CommandKeys, createCommandDictionary } from "../cmdTreeView/cmdStore";
 import { getIdfTargetFromSdkconfig } from "../workspaceConfig";
+import { pathExists } from "fs-extra";
 
 export const statusBarItems: { [key: string]: StatusBarItem } = {};
 
@@ -61,6 +63,12 @@ export async function createCmdsStatusBarItems(workspaceFolder: Uri) {
   let projectConf = ESP.ProjectConfiguration.store.get<string>(
     ESP.ProjectConfiguration.SELECTED_CONFIG
   );
+  let projectConfPath = path.join(
+    workspaceFolder.fsPath,
+    ESP.ProjectConfiguration.PROJECT_CONFIGURATION_FILENAME
+  );
+  let projectConfExists = await pathExists(projectConfPath);
+
   let currentIdfVersion = await getCurrentIdfSetup(workspaceFolder, false);
 
   statusBarItems["workspace"] = createStatusBarItem(
@@ -101,16 +109,31 @@ export async function createCmdsStatusBarItems(workspaceFolder: Uri) {
     );
   }
 
-  if (projectConf) {
-    statusBarItems["projectConf"] = createStatusBarItem(
-      `$(${
-        commandDictionary[CommandKeys.SelectProjectConfiguration].iconId
-      }) ${projectConf}`,
-      commandDictionary[CommandKeys.SelectProjectConfiguration].tooltip,
-      CommandKeys.SelectProjectConfiguration,
-      99,
-      commandDictionary[CommandKeys.SelectProjectConfiguration].checkboxState
-    );
+  if (projectConfExists) {
+    if (!projectConf) {
+      let statusBarItemName = "Invalid Path";
+      let statusBarItemTooltip =
+        "Invalid configuration path. Click to modify project configuration";
+      statusBarItems["projectConf"] = createStatusBarItem(
+        `$(${
+          commandDictionary[CommandKeys.SelectProjectConfiguration].iconId
+        }) ${statusBarItemName}`,
+        statusBarItemTooltip,
+        "espIdf.projectConfigurationEditor",
+        99,
+        commandDictionary[CommandKeys.SelectProjectConfiguration].checkboxState
+      );
+    } else {
+      statusBarItems["projectConf"] = createStatusBarItem(
+        `$(${
+          commandDictionary[CommandKeys.SelectProjectConfiguration].iconId
+        }) ${projectConf}`,
+        commandDictionary[CommandKeys.SelectProjectConfiguration].tooltip,
+        CommandKeys.SelectProjectConfiguration,
+        99,
+        commandDictionary[CommandKeys.SelectProjectConfiguration].checkboxState
+      );
+    }
   }
 
   statusBarItems["target"] = createStatusBarItem(