diff --git a/docker-compose.yml b/docker-compose.yml
index 48f3abc607b03..b4c65f2538b22 100644
--- a/docker-compose.yml
+++ b/docker-compose.yml
@@ -106,6 +106,7 @@ services:
       PHP_FPM_UID: ${PHP_FPM_UID-1000}
       PHP_FPM_GID: ${PHP_FPM_GID-1000}
       HOST_PATH: ${PWD-}/${LOCAL_DIR-src}
+      WP_CONFIG_PATH: /var/www/wp-config.php
 
     volumes:
       - ./:/var/www
diff --git a/tools/local-env/scripts/install.js b/tools/local-env/scripts/install.js
index 3bbc30d4d8a13..b9fba5667a924 100644
--- a/tools/local-env/scripts/install.js
+++ b/tools/local-env/scripts/install.js
@@ -1,8 +1,10 @@
+/* jshint node:true */
+
 const dotenv       = require( 'dotenv' );
 const dotenvExpand = require( 'dotenv-expand' );
 const wait_on = require( 'wait-on' );
 const { execSync } = require( 'child_process' );
-const { renameSync, readFileSync, writeFileSync } = require( 'fs' );
+const { readFileSync, writeFileSync } = require( 'fs' );
 const local_env_utils = require( './utils' );
 
 dotenvExpand.expand( dotenv.config() );
@@ -11,7 +13,7 @@ dotenvExpand.expand( dotenv.config() );
 local_env_utils.determine_auth_option();
 
 // Create wp-config.php.
-wp_cli( 'config create --dbname=wordpress_develop --dbuser=root --dbpass=password --dbhost=mysql --force' );
+wp_cli( `config create --dbname=wordpress_develop --dbuser=root --dbpass=password --dbhost=mysql --force --config-file=${process.env.LOCAL_DIR}/../wp-config.php` );
 
 // Add the debug settings to wp-config.php.
 // Windows requires this to be done as an additional step, rather than using the --extra-php option in the previous step.
@@ -22,26 +24,35 @@ wp_cli( `config set SCRIPT_DEBUG ${process.env.LOCAL_SCRIPT_DEBUG} --raw --type=
 wp_cli( `config set WP_ENVIRONMENT_TYPE ${process.env.LOCAL_WP_ENVIRONMENT_TYPE} --type=constant` );
 wp_cli( `config set WP_DEVELOPMENT_MODE ${process.env.LOCAL_WP_DEVELOPMENT_MODE} --type=constant` );
 
-// Move wp-config.php to the base directory, so it doesn't get mixed up in the src or build directories.
-renameSync( `${process.env.LOCAL_DIR}/wp-config.php`, 'wp-config.php' );
-
 // Read in wp-tests-config-sample.php, edit it to work with our config, then write it to wp-tests-config.php.
 const testConfig = readFileSync( 'wp-tests-config-sample.php', 'utf8' )
 	.replace( 'youremptytestdbnamehere', 'wordpress_develop_tests' )
 	.replace( 'yourusernamehere', 'root' )
 	.replace( 'yourpasswordhere', 'password' )
 	.replace( 'localhost', 'mysql' )
-	.replace( "'WP_TESTS_DOMAIN', 'example.org'", `'WP_TESTS_DOMAIN', '${process.env.LOCAL_WP_TESTS_DOMAIN}'` )
-	.concat( "\ndefine( 'FS_METHOD', 'direct' );\n" );
+	.replace( `'WP_TESTS_DOMAIN', 'example.org'`, `'WP_TESTS_DOMAIN', '${process.env.LOCAL_WP_TESTS_DOMAIN}'` )
+	.concat( `\ndefine( 'FS_METHOD', 'direct' );\n` );
 
 writeFileSync( 'wp-tests-config.php', testConfig );
 
 // Once the site is available, install WordPress!
-wait_on( { resources: [ `tcp:localhost:${process.env.LOCAL_PORT}`] } )
+wait_on( {
+	resources: [ `tcp:localhost:${process.env.LOCAL_PORT}`],
+	timeout: 3000,
+} )
+	.catch( err => {
+		console.error( `Error: It appears the development environment has not been started. Message: ${ err.message }` );
+		console.error( `Did you forget to do 'npm run env:start'?` );
+		process.exit( 1 );
+	} )
 	.then( () => {
 		wp_cli( 'db reset --yes' );
 		const installCommand = process.env.LOCAL_MULTISITE === 'true'  ? 'multisite-install' : 'install';
 		wp_cli( `core ${ installCommand } --title="WordPress Develop" --admin_user=admin --admin_password=password --admin_email=test@example.com --skip-email --url=http://localhost:${process.env.LOCAL_PORT}` );
+	} )
+	.catch( err => {
+		console.error( `Error: Unable to reset DB and install WordPress. Message: ${ err.message }` );
+		process.exit( 1 );
 	} );
 
 /**