diff --git a/build-tools/build.xml b/build-tools/build.xml
index 45b19aae2cb..8202b219f1d 100644
--- a/build-tools/build.xml
+++ b/build-tools/build.xml
@@ -42,6 +42,27 @@
     </macrodef>
 
 
+    <!-- Runs <kotlinc> task specifying either "srcdir" or "file" attribute -->
+    <macrodef name="run-kotlinc">
+        <attribute name="file"   default=""/>
+        <attribute name="srcdir" default=""/>
+        <sequential>
+
+            <delete dir = "${tests-dir}" includes = "**/*"/>
+
+            <if>
+                <equals arg1="@{file}" arg2=""/>
+                <then>
+                    <kotlinc  destdir = "${tests-dir}" srcdir = "@{srcdir}"/>
+                </then>
+                <else>
+                    <kotlinc  destdir = "${tests-dir}" file   = "@{file}"/>
+                </else>
+            </if>
+        </sequential>
+    </macrodef>
+
+
     <!-- Runs <java> for compiled classes and verifies the output correctness -->
     <macrodef name="run-java">
         <attribute name="out"/>
@@ -84,13 +105,10 @@
         <attribute name="args" default=""/>
         <attribute name="out"/>
         <sequential>
-            <delete   dir     = "${tests-dir}" includes = "**/*"/>
-            <kotlinc  destdir = "${tests-dir}" file     = "@{root}/Hello.kt"/>
-            <run-java args    = "@{args}"      out      = "@{out}"/>
-
-            <delete   dir     = "${tests-dir}" includes = "**/*"/>
-            <kotlinc  destdir = "${tests-dir}" srcdir   = "@{root}"/>
-            <run-java args    = "@{args}"      out      = "@{out}"/>
+            <run-kotlinc file   = "@{root}/Hello.kt"/>
+            <run-java    args   = "@{args}" out = "@{out}"/>
+            <run-kotlinc srcdir = "@{root}"/>
+            <run-java    args   = "@{args}" out = "@{out}"/>
         </sequential>
     </macrodef>
 
@@ -111,9 +129,7 @@
     <!-- Compiles, runs and verifies the output of web demo longer examples -->
     <macrodef name="longer-examples-tests">
         <sequential>
-            <delete  dir     = "${tests-dir}" includes = "**/*"/>
-            <kotlinc destdir = "${tests-dir}" srcdir   = "${basedir}/build-tools/test/longer-examples" />
-
+            <run-kotlinc srcdir = "${basedir}/build-tools/test/longer-examples" />
             <run-java classname = "bottles.namespace" equals="false" out="12 bottles of beer on the wall, 12 bottles of beer." />
             <run-java classname = "maze.namespace"    equals="false" out="O ~OOOOOOOOOOOOOO"/>
             <run-java classname = "life.namespace"    equals="false" out="***  ** **  ***"/>
@@ -122,6 +138,29 @@
     </macrodef>
 
 
+    <!-- Verifies build fails if <kotlinc> fails -->
+    <macrodef name="compilation-fail-test">
+        <sequential>
+            <var name="failed" value="false"/>
+            <trycatch property="error-message" reference="bar">
+                <try>
+                    <!-- Should fail -->
+                    <run-kotlinc srcdir = "${basedir}/build-tools/test/compilation-fail"/>
+                </try>
+                <catch>
+                    <var name="failed" value="true"/>
+                </catch>
+            </trycatch>
+            <if>
+                <isfalse value="${failed}"/>
+                <then>
+                    <fail message="Compilation should have failed!"/>
+                </then>
+            </if>
+        </sequential>
+    </macrodef>
+
+
     <!-- Creates build tools distribution jar -->
     <target name="buildToolsJar" depends="compile">
         <mkdir dir    ="${output}/classes/buildTools"/>
@@ -152,5 +191,6 @@
         <setup-kotlin-home/>
         <hello-tests/>
         <longer-examples-tests/>
+        <compilation-fail-test/>
     </target>
 </project>
diff --git a/build-tools/test/compilation-fail/Bottles.kt b/build-tools/test/compilation-fail/Bottles.kt
new file mode 100644
index 00000000000..7e2e0f02c99
--- /dev/null
+++ b/build-tools/test/compilation-fail/Bottles.kt
@@ -0,0 +1,59 @@
+/**
+ * "Bottles.kt" that doesn't compile, see line 6.
+ */
+package bottles
+
+fun main(args : Array<String>
+  if (args.isEmpty) {
+    printBottles(99)
+  }
+  else {
+    try {
+      printBottles(Integer.parseInt(args[0]))
+    }
+    catch (e : NumberFormatException) {
+      System.err?.println("You have passed '${args[0]}' as a number of bottles, " +
+                          "but it is not a valid integral number")
+    }
+  }
+}
+
+fun printBottles(bottleCount : Int) {
+  if (bottleCount <= 0) {
+    println("No bottles - no song")
+    return
+  }
+
+  println("The \"${bottlesOfBeer(bottleCount)}\" song\n")
+
+  var bottles = bottleCount
+  while (bottles > 0) {
+    val bottlesOfBeer = bottlesOfBeer(bottles)
+    print("$bottlesOfBeer on the wall, $bottlesOfBeer.\nTake one down, pass it around, ")
+    bottles--
+    println("${bottlesOfBeer(bottles)} on the wall.\n")
+  }
+  println("No more bottles of beer on the wall, no more bottles of beer.\n" +
+          "Go to the store and buy some more, ${bottlesOfBeer(bottleCount)} on the wall.")
+}
+
+fun bottlesOfBeer(count : Int) : String =
+  when (count) {
+           0 -> "no more bottles"
+           1 -> "1 bottle"
+           else -> "$count bottles"
+         } + " of beer"
+
+/*
+ * An excerpt from the Standard Library
+ */
+
+// From the std.io package
+// These are simple functions that wrap standard Java API calls
+fun print(message : String) { System.out?.print(message) }
+fun println(message : String) { System.out?.println(message) }
+
+// From the std package
+// This is an extension property, i.e. a property that is defined for the
+// type Array<T>, but does not sit inside the class Array
+val <T> Array<T>.isEmpty : Boolean get() = size == 0