diff --git a/api/filesystem/copy.go b/api/filesystem/copy.go
index abf4d33aa..bc0abb766 100644
--- a/api/filesystem/copy.go
+++ b/api/filesystem/copy.go
@@ -68,7 +68,7 @@ func copyFile(src, dst string) error {
 	defer from.Close()
 
 	// has to include 'execute' bit, otherwise fails. MkdirAll follows `mkdir -m` restrictions
-	if err := os.MkdirAll(filepath.Dir(dst), 0744); err != nil {
+	if err := os.MkdirAll(filepath.Dir(dst), 0755); err != nil {
 		return err
 	}
 	to, err := os.Create(dst)
diff --git a/pkg/libstack/compose/composeplugin.go b/pkg/libstack/compose/composeplugin.go
index c83685351..8ebc12062 100644
--- a/pkg/libstack/compose/composeplugin.go
+++ b/pkg/libstack/compose/composeplugin.go
@@ -98,6 +98,11 @@ func withComposeService(
 			WorkingDir:  filepath.Dir(filePaths[0]),
 		}
 
+		if options.ProjectDir != "" {
+			// When relative paths are used in the compose file, the project directory is used as the base path
+			configDetails.WorkingDir = options.ProjectDir
+		}
+
 		for _, p := range filePaths {
 			configDetails.ConfigFiles = append(configDetails.ConfigFiles, types.ConfigFile{Filename: p})
 		}