diff --git a/tools/projmgr/include/ProjMgrWorker.h b/tools/projmgr/include/ProjMgrWorker.h
index 9a58dd494..568351c15 100644
--- a/tools/projmgr/include/ProjMgrWorker.h
+++ b/tools/projmgr/include/ProjMgrWorker.h
@@ -614,7 +614,7 @@ class ProjMgrWorker {
   bool ProcessLinkerOptions(ContextItem& context);
   bool ProcessLinkerOptions(ContextItem& context, const LinkerItem& linker, const std::string& ref);
   bool ProcessProcessorOptions(ContextItem& context);
-  bool AddContext(ProjMgrParser& parser, ContextDesc& descriptor, const TypePair& type, const std::string& cprojectFile, ContextItem& parentContext);
+  bool AddContext(ContextDesc& descriptor, const TypePair& type, ContextItem& parentContext);
   bool ValidateContext(ContextItem& context);
   bool FormatValidationResults(std::set<std::string>& results, const ContextItem& context);
   void UpdateMisc(std::vector<MiscItem>& vec, const std::string& compiler);
@@ -669,6 +669,7 @@ class ProjMgrWorker {
   void UpdatePartialReferencedContext(ContextItem& context, std::string& contextName);
   void ExpandAccessSequence(const ContextItem& context, const ContextItem& refContext, const std::string& sequence, std::string& item, bool withHeadingDot);
   bool GetGeneratorDir(const RteGenerator* generator, ContextItem& context, const std::string& layer, std::string& genDir);
+  bool ParseContextLayers(ContextItem& context);
 };
 
 #endif  // PROJMGRWORKER_H
diff --git a/tools/projmgr/src/ProjMgrWorker.cpp b/tools/projmgr/src/ProjMgrWorker.cpp
index 7d55c248e..ee4270010 100644
--- a/tools/projmgr/src/ProjMgrWorker.cpp
+++ b/tools/projmgr/src/ProjMgrWorker.cpp
@@ -75,13 +75,13 @@ bool ProjMgrWorker::AddContexts(ProjMgrParser& parser, ContextDesc& descriptor,
 
   // No build/target-types
   if (context.csolution->buildTypes.empty() && context.csolution->targetTypes.empty()) {
-    return AddContext(parser, descriptor, { "" }, cprojectFile, context);
+    return AddContext(descriptor, { "" }, context);
   }
 
   // No build-types
   if (context.csolution->buildTypes.empty()) {
     for (const auto& targetTypeItem : context.csolution->targetTypes) {
-      if (!AddContext(parser, descriptor, {"", targetTypeItem.first}, cprojectFile, context)) {
+      if (!AddContext(descriptor, {"", targetTypeItem.first}, context)) {
         return false;
       }
     }
@@ -91,7 +91,7 @@ bool ProjMgrWorker::AddContexts(ProjMgrParser& parser, ContextDesc& descriptor,
   // Add contexts for project x build-type x target-type combinations
   for (const auto& buildTypeItem : context.csolution->buildTypes) {
     for (const auto& targetTypeItem : context.csolution->targetTypes) {
-      if (!AddContext(parser, descriptor, {buildTypeItem.first, targetTypeItem.first}, cprojectFile, context)) {
+      if (!AddContext(descriptor, {buildTypeItem.first, targetTypeItem.first}, context)) {
         return false;
       }
     }
@@ -99,7 +99,7 @@ bool ProjMgrWorker::AddContexts(ProjMgrParser& parser, ContextDesc& descriptor,
   return true;
 }
 
-bool ProjMgrWorker::AddContext(ProjMgrParser& parser, ContextDesc& descriptor, const TypePair& type, const string& cprojectFile, ContextItem& parentContext) {
+bool ProjMgrWorker::AddContext(ContextDesc& descriptor, const TypePair& type, ContextItem& parentContext) {
   if (CheckType(descriptor.type, {type})) {
     ContextItem context = parentContext;
     context.type.build = type.build;
@@ -138,46 +138,50 @@ bool ProjMgrWorker::AddContext(ProjMgrParser& parser, ContextDesc& descriptor, c
     context.variables[ProjMgrUtils::AS_BUILD_TYPE] = context.type.build;
     context.variables[ProjMgrUtils::AS_TARGET_TYPE] = context.type.target;
 
-    // user defined variables
-    auto userVariablesList = {
-      context.csolution->target.build.variables,
-      context.csolution->buildTypes[type.build].variables,
-      context.csolution->targetTypes[type.target].build.variables,
-    };
-    for (const auto& var : userVariablesList) {
-      for (const auto& [key, value] : var) {
-        if ((context.variables.find(key) != context.variables.end()) && (context.variables.at(key) != value)) {
-          ProjMgrLogger::Warn("variable '" + key + "' redefined from '" + context.variables.at(key) + "' to '" + value + "'");
-        }
-        context.variables[key] = value;
-      }
-    }
+    ProjMgrUtils::PushBackUniquely(m_ymlOrderedContexts, context.name);
+    m_contexts[context.name] = context;
+  }
+  return true;
+}
 
-    // parse clayers
-    for (const auto& clayer : context.cproject->clayers) {
-      if (clayer.layer.empty()) {
-        continue;
+bool ProjMgrWorker::ParseContextLayers(ContextItem& context) {
+  // user defined variables
+  auto userVariablesList = {
+    context.csolution->target.build.variables,
+    context.csolution->buildTypes[context.type.build].variables,
+    context.csolution->targetTypes[context.type.target].build.variables,
+  };
+  for (const auto& var : userVariablesList) {
+    for (const auto& [key, value] : var) {
+      if ((context.variables.find(key) != context.variables.end()) && (context.variables.at(key) != value)) {
+        ProjMgrLogger::Warn("variable '" + key + "' redefined from '" + context.variables.at(key) + "' to '" + value + "'");
       }
-      if (CheckContextFilters(clayer.typeFilter, context)) {
-        string const& clayerRef = ExpandString(clayer.layer, context.variables);
-        string const& clayerFile = fs::canonical(fs::path(cprojectFile).parent_path().append(clayerRef), ec).generic_string();
-        if (clayerFile.empty()) {
-          if (regex_match(clayer.layer, regex(".*\\$.*\\$.*"))) {
-            ProjMgrLogger::Warn(clayer.layer, "variable was not defined for context '" + context.name +"'");
-          } else {
-            ProjMgrLogger::Error(clayer.layer, "clayer file was not found");
-            return false;
-          }
+      context.variables[key] = value;
+    }
+  }
+  // parse clayers
+  for (const auto& clayer : context.cproject->clayers) {
+    if (clayer.layer.empty()) {
+      continue;
+    }
+    if (CheckContextFilters(clayer.typeFilter, context)) {
+      error_code ec;
+      string const& clayerRef = ExpandString(clayer.layer, context.variables);
+      string const& clayerFile = fs::canonical(fs::path(context.cproject->directory).append(clayerRef), ec).generic_string();
+      if (clayerFile.empty()) {
+        if (regex_match(clayer.layer, regex(".*\\$.*\\$.*"))) {
+          ProjMgrLogger::Warn(clayer.layer, "variable was not defined for context '" + context.name +"'");
         } else {
-          if (!parser.ParseClayer(clayerFile, m_checkSchema)) {
-            return false;
-          }
-          context.clayers[clayerFile] = &parser.GetClayers().at(clayerFile);
+          ProjMgrLogger::Error(clayer.layer, "clayer file was not found");
+          return false;
+        }
+      } else {
+        if (!m_parser->ParseClayer(clayerFile, m_checkSchema)) {
+          return false;
         }
+        context.clayers[clayerFile] = &m_parser->GetClayers().at(clayerFile);
       }
     }
-    ProjMgrUtils::PushBackUniquely(m_ymlOrderedContexts, context.name);
-    m_contexts[context.name] = context;
   }
   return true;
 }
@@ -3319,6 +3323,14 @@ bool ProjMgrWorker::ParseContextSelection(const vector<string>& contextSelection
       cout << "  " + context << endl;
     }
   }
+
+  if (!((m_selectedContexts.size() == 1) && (m_selectedContexts.front() == RteUtils::EMPTY_STRING))) {
+    for (const auto& context : m_selectedContexts) {
+      if (!ParseContextLayers(m_contexts[context])) {
+        return false;
+      }
+    }
+  }
   return true;
 }
 
diff --git a/tools/projmgr/test/data/TestSolution/contexts.cproject.yml b/tools/projmgr/test/data/TestSolution/contexts.cproject.yml
index f21e87543..14ac43d0a 100644
--- a/tools/projmgr/test/data/TestSolution/contexts.cproject.yml
+++ b/tools/projmgr/test/data/TestSolution/contexts.cproject.yml
@@ -1,3 +1,10 @@
 project:
+  device: RteTest_ARMCM0
+  compiler: AC6
+
   components:
     - component: CORE
+
+  layers:
+    - layer: $LayerVar$
+      type: LayerType
diff --git a/tools/projmgr/test/src/ProjMgrUnitTests.cpp b/tools/projmgr/test/src/ProjMgrUnitTests.cpp
index 137c29fcc..59f34e47f 100644
--- a/tools/projmgr/test/src/ProjMgrUnitTests.cpp
+++ b/tools/projmgr/test/src/ProjMgrUnitTests.cpp
@@ -2951,6 +2951,30 @@ TEST_F(ProjMgrUnitTests, RunCheckForContext) {
   }
 }
 
+TEST_F(ProjMgrUnitTests, RunCheckContextProcessing) {
+  char* argv[7];
+  StdStreamRedirect streamRedirect;
+  const string& csolution = testinput_folder + "/TestSolution/contexts.csolution.yml";
+  argv[1] = (char*)"convert";
+  argv[2] = (char*)csolution.c_str();
+  argv[3] = (char*)"-c";
+  argv[4] = (char*)"contexts.B1+T1";
+  argv[5] = (char*)"-o";
+  argv[6] = (char*)testoutput_folder.c_str();
+  EXPECT_EQ(0, RunProjMgr(7, argv, 0));
+
+  // Check warning for processed context
+  const string expected = "$LayerVar$ - warning csolution: variable was not defined for context 'contexts.B1+T1'";
+  auto errStr = streamRedirect.GetErrorString();
+  EXPECT_TRUE(errStr.find(expected) != string::npos);
+
+  // Contexts not being processed don't trigger warnings
+  const vector<string> absenceExpectedList = { "'contexts.B1+T2'", "'contexts.B2+T1'", "'contexts.B2+T2'" };
+  for (const auto& absenceExpected : absenceExpectedList) {
+    EXPECT_TRUE(errStr.find(absenceExpected) == string::npos);
+  }
+}
+
 TEST_F(ProjMgrUnitTests, RunProjMgrOutputFiles) {
   char* argv[5];
   StdStreamRedirect streamRedirect;
diff --git a/tools/projmgr/test/src/ProjMgrWorkerUnitTests.cpp b/tools/projmgr/test/src/ProjMgrWorkerUnitTests.cpp
index f46d3d76d..9178d6bda 100644
--- a/tools/projmgr/test/src/ProjMgrWorkerUnitTests.cpp
+++ b/tools/projmgr/test/src/ProjMgrWorkerUnitTests.cpp
@@ -25,6 +25,8 @@ class ProjMgrWorkerUnitTests : public ProjMgrWorker, public ::testing::Test {
 
 void ProjMgrWorkerUnitTests::SetCsolutionPacks(CsolutionItem* csolution, std::vector<std::string> packs, std::string targetType) {
   ContextItem context;
+  static CprojectItem cproject;
+  context.cproject = &cproject;
   for (auto& pack : packs) {
     csolution->packs.push_back(PackItem{pack, {}});
   }