diff --git a/tools/project-context.js b/tools/project-context.js
index 853028b5bf..90f8138433 100644
--- a/tools/project-context.js
+++ b/tools/project-context.js
@@ -304,7 +304,12 @@ _.extend(exports.ProjectContext.prototype, {
   getProjectAndLocalPackagesWatchSet: function () {
     var self = this;
     var watchSet = self.getProjectWatchSet();
-    watchSet.merge(self.isopackCache.allLoadedLocalPackagesWatchSet);
+
+    // Include the loaded local packages (ie, the non-metadata files) but only
+    // if we've actually gotten to the buildLocalPackages step.
+    if (self.isopackCache) {
+      watchSet.merge(self.isopackCache.allLoadedLocalPackagesWatchSet);
+    }
     return watchSet;
   },
 
@@ -418,10 +423,6 @@ _.extend(exports.ProjectContext.prototype, {
         localPackageSearchDirs: searchDirs,
         explicitlyAddedLocalPackageDirs: self._explicitlyAddedLocalPackageDirs
       });
-      if (buildmessage.jobHasMessages()) {
-        self.projectCatalog = null;
-        self.localCatalog = null;
-      }
     });
 
     self._completedStage = STAGE.INITIALIZE_CATALOG;
diff --git a/tools/tests/cordova-plugins.js b/tools/tests/cordova-plugins.js
index f0dc218de7..a71f21733b 100644
--- a/tools/tests/cordova-plugins.js
+++ b/tools/tests/cordova-plugins.js
@@ -124,9 +124,15 @@ selftest.define("change cordova plugins", function () {
   run.waitSecs(2);
   run.match("restarted");
 
+  // Introduce an error.
   s.cp('packages/contains-cordova-plugin/package3.js', 'packages/contains-cordova-plugin/package.js');
   run.waitSecs(2);
   run.match("exact version");
+
+  // Fix the error.
+  s.cp('packages/contains-cordova-plugin/package2.js', 'packages/contains-cordova-plugin/package.js');
+  run.waitSecs(2);
+  run.match("restarted");
 });
 
 
@@ -243,14 +249,14 @@ selftest.define("remove cordova plugins", function () {
   run = s.run("remove", "cordova:blahblah");
   run.matchErr("not in this project");
   run.forbidAll("removed");
-  run.expectExit(0);
+  run.expectExit(1);
 
   run = s.run("remove", "cordova:blahblah",
               "cordova:org.apache.cordova.camera");
   run.waitSecs(5);
   run.matchErr("not in this project");
   run.match("removed");
-  run.expectExit(0);
+  run.expectExit(1);
   checkUserPlugins(s, []);
 });