diff --git a/vscode-powershell.build.ps1 b/vscode-powershell.build.ps1
index 33231e3ec0..513fbb5799 100644
--- a/vscode-powershell.build.ps1
+++ b/vscode-powershell.build.ps1
@@ -13,60 +13,97 @@ $script:IsPreviewExtension = $script:PackageJson.name -like "*preview*" -or $scr
 Write-Host "`n### Extension Version: $($script:PackageJson.version) Extension Name: $($script:PackageJson.name)`n" -ForegroundColor Green
 
 function Get-EditorServicesPath {
-    $psesRepoPath = if ($EditorServicesRepoPath) {
-        $EditorServicesRepoPath
+    if ($EditorServicesRepoPath) {
+        Resolve-Path $EditorServicesRepoPath -ErrorAction Stop
     } else {
-        "$PSScriptRoot/../PowerShellEditorServices/"
+        Resolve-Path "$PSScriptRoot/../PowerShellEditorServices/" -ErrorAction Stop
     }
-    # NOTE: The ErrorActionPreference for both Invoke-Build and Azure DevOps
-    # scripts is Stop, but we want to continue and return false here.
-    return Resolve-Path "$psesRepoPath/PowerShellEditorServices.build.ps1" -ErrorAction Continue
 }
 
-task Restore -If { !(Test-Path "$PSScriptRoot/node_modules") } {
+function Get-EditorServicesBuildScriptPath {
+    return Resolve-Path (Join-Path (Get-EditorServicesPath) 'PowerShellEditorServices.build.ps1') -ErrorAction Stop
+}
+try {
+    $editorServicesPath = Get-EditorServicesPath
+    $editorServicesBuildScriptPath = Get-EditorServicesBuildScriptPath
+} catch {
+    throw 'Powershell Editor Services repo was not detected. Specify its path via the -EditorServicesRepoPath parameter or ensure it is available in the directory above {0}' -f $PSScriptRoot
+}
+
+$restoreCheckpoint = "$PSScriptRoot/node_modules/restored"
+#This will run when node_modules is empty or when package.json is updated
+Task Restore -Input $PSScriptRoot/package.json -Output { $RestoreCheckpoint } {
+    $ErrorActionPreference = 'stop'
     Write-Host "`n### Restoring vscode-powershell dependencies`n" -ForegroundColor Green
     # When in a CI build use the --loglevel=error parameter so that
     # package install warnings don't cause PowerShell to throw up
     if ($env:TF_BUILD) {
-        exec { & npm ci --loglevel=error }
+        Exec { & npm ci --loglevel=error }
     } else {
-        exec { & npm install }
+        Exec { & npm install }
     }
+    New-Item $restoreCheckpoint
 }
 
 
 #region Clean tasks
-
-task Clean {
+Task Clean {
     Write-Host "`n### Cleaning vscode-powershell`n" -ForegroundColor Green
-    Remove-Item ./modules -Exclude "README.md" -Recurse -Force -ErrorAction Ignore
+    Remove-Item ./modules -Exclude 'README.md' -Recurse -Force -ErrorAction Ignore
     Remove-Item ./out -Recurse -Force -ErrorAction Ignore
     Remove-Item ./node_modules -Recurse -Force -ErrorAction Ignore
 }
 
-task CleanEditorServices -If (Get-EditorServicesPath) {
+Task CleanEditorServices -If $editorServicesBuildScriptPath {
     Write-Host "`n### Cleaning PowerShellEditorServices`n" -ForegroundColor Green
-    Invoke-Build Clean (Get-EditorServicesPath)
+    Invoke-Build Clean $editorServicesBuildScriptPath
 }
 
 #endregion
 #region Build tasks
 
-task BuildEditorServices -If (Get-EditorServicesPath) {
+Task BuildEditorServices -Input {
+    Get-ChildItem (Join-Path $editorServicesPath 'src') |
+        Get-ChildItem -Exclude 'bin', 'obj' |
+        Get-ChildItem -File -Recurse |
+        Where-Object Name -NotMatch 'BuildInfo.cs'
+} -Output {
+    #Some copied files preserve timestamps which breaks the incremental build process as the files are seen as "older" than the source
+    #We use these files as a freshness indicator since they always gets updated on a build
+    #TODO: More granular incremental build on PSES tasks
+    Join-Path $editorServicesPath 'module/PowerShellEditorServices/bin/Core/Microsoft.PowerShell.EditorServices.Hosting.dll'
+} -If $editorServicesBuildScriptPath {
     Write-Host "`n### Building PowerShellEditorServices`n" -ForegroundColor Green
-    Invoke-Build Build (Get-EditorServicesPath)
+    Invoke-Build Build $editorServicesBuildScriptPath
 }
 
-task CopyEditorServices -If { !(Test-Path ./modules/PowerShellEditorServices) -and (Get-EditorServicesPath) } BuildEditorServices, {
+#This will run when the editorservices module is empty or has been updated
+$PSESModulePath = (Join-Path $editorServicesPath 'module')
+Task CopyEditorServices -Partial -Input {
+    $SCRIPT:PSESFiles = Get-ChildItem -File -Recurse $PSESModulePath
+    $PSESFiles
+} -Output {
+    #Get the relative path. Resolve-Path -Relative requires you to be in the directory you want to be relative
+    $modulesDir = Join-Path $PSScriptRoot 'modules'
+    [string]$stripModulesDirRegex = '^' + [Regex]::Escape($PSESModulePath)
+    ($SCRIPT:PSESFiles.fullname -replace $stripModulesDirRegex, '').foreach{ Join-Path $modulesDir $PSItem }
+} -If {
+    $editorServicesPath
+} BuildEditorServices, {
     Write-Host "`n### Copying PowerShellEditorServices module files" -ForegroundColor Green
-    Copy-Item -Recurse -Force "$(Split-Path (Get-EditorServicesPath))/module/*" ./modules
+    Copy-Item $PSESModulePath/* -Recurse -Force -Destination (Join-Path $PSScriptRoot 'modules')
 }
 
-task Build CopyEditorServices, Restore, {
+Task Build -Input {
+    Get-ChildItem -File -Recurse (Join-Path $PSScriptRoot 'src')
+} -Output {
+    Join-Path $PSScriptRoot 'out/main.js'
+    Get-ChildItem -File -Recurse (Join-Path $PSScriptRoot 'out')
+} CopyEditorServices, Restore, {
     Write-Host "`n### Building vscode-powershell" -ForegroundColor Green
     # TODO: TSLint is deprecated and we need to switch to ESLint.
     # https://github.com/PowerShell/vscode-powershell/pull/3331
-    exec { & npm run lint }
+    Exec { & npm run lint }
 
     # TODO: When supported we should use `esbuild` for the tests too. Although
     # we now use `esbuild` to transpile, bundle, and minify the extension, we
@@ -74,27 +111,31 @@ task Build CopyEditorServices, Restore, {
     # Code test runner expects individual files (and globs them at runtime).
     # Unfortunately `esbuild` doesn't support emitting 1:1 files (yet).
     # https://github.com/evanw/esbuild/issues/944
-    exec { & npm run build }
+    Exec { & npm run build }
 }
 
 #endregion
 #region Test tasks
 
-task Test -If (!($env:TF_BUILD -and $global:IsLinux)) Build, {
+Task Test -If (!($env:TF_BUILD -and $global:IsLinux)) Build, {
     Write-Host "`n### Running extension tests" -ForegroundColor Green
-    exec { & npm run test }
+    if ($ENV:TERM_PROGRAM -eq 'vscode') {
+        Write-Warning 'E2E Tests cannot be performed from the CLI while vscode is running, please close vscode and run again or use the "Launch Extension Tests" launch config'
+        return
+    }
+    Exec { & npm run test }
 }
 
-task TestEditorServices -If (Get-EditorServicesPath) {
+Task TestEditorServices -If $editorServicesBuildPath {
     Write-Host "`n### Testing PowerShellEditorServices`n" -ForegroundColor Green
-    Invoke-Build Test (Get-EditorServicesPath)
+    Invoke-Build Test $editorServicesBuildPath
 }
 
 #endregion
 
 #region Package tasks
 
-task UpdateReadme -If { $script:IsPreviewExtension } {
+Task UpdateReadme -If { $script:IsPreviewExtension } {
     # Add the preview text
     $newReadmeTop = '# PowerShell Language Support for Visual Studio Code
 
@@ -104,13 +145,21 @@ task UpdateReadme -If { $script:IsPreviewExtension } {
     $readmePath = (Join-Path $PSScriptRoot README.md)
 
     $readmeContent = Get-Content -Path $readmePath
-    if (!($readmeContent -match "This is the PREVIEW version of the PowerShell extension")) {
+    if (!($readmeContent -match 'This is the PREVIEW version of the PowerShell extension')) {
         $readmeContent[0] = $newReadmeTop
         $readmeContent | Set-Content $readmePath -Encoding utf8
     }
 }
 
-task Package UpdateReadme, Build, {
+Task Package -Input {
+    Get-ChildItem $PSScriptRoot -Exclude '.vscode-test', 'logs', 'sessions', 'node_modules', '.git' |
+        Get-ChildItem -Recurse -File
+} -Output {
+    $vsix = Get-ChildItem $PSScriptRoot/*.vsix
+    if (-not $VSIX) {
+        'No VSIX Created Yet'
+    } else { $vsix }
+} UpdateReadme, Build, {
     assert { Test-Path ./modules/PowerShellEditorServices }
     Write-Host "`n### Packaging $($script:PackageJson.name)-$($script:PackageJson.version).vsix`n" -ForegroundColor Green
     exec { & npm run package }