diff --git a/.env.example b/.env.example
new file mode 100644
index 00000000..a0253933
--- /dev/null
+++ b/.env.example
@@ -0,0 +1,11 @@
+SECRET_KEY=secret-key
+
+DATABASE_URL=psql://postgres:postgres@db:5432/postgres
+CACHE_DEFAULT=redis://redis:6379/0
+STATIC_URL=/static/
+STATIC_ROOT=/var/static/
+
+POSTGRES_DB=postgres
+POSTGRES_USER=postgres
+POSTGRES_PASSWORD=postgres
+POSTGRES_HOST=db
\ No newline at end of file
diff --git a/.flake8 b/.flake8
index 628307c6..950514d9 100644
--- a/.flake8
+++ b/.flake8
@@ -1,7 +1,17 @@
 [flake8]
 max-complexity = 20
 max-line-length = 120
-exclude = ~*
+exclude =
+    .venv,
+    venv,
+    .git,
+    __pycache__,
+    build,
+    dist,
+    migrations,
+    snapshots,
+    __pypackages__,
+
 ignore = E401,W391,E128,E261,E731,Q000,W504,W606,W503,E203
 ;putty-ignore =
     ;    tests/test_choice_as_instance.py : E501
diff --git a/.gitignore b/.gitignore
index 124ce5e9..578bd6ae 100644
--- a/.gitignore
+++ b/.gitignore
@@ -1,4 +1,3 @@
-.*
 ~*
 *.min.min.js
 *.py[ico]
@@ -25,3 +24,4 @@ docker/conf/redis.conf
 src/aurora/staticfiles
 
 .pdm-python
+.vscode
\ No newline at end of file
diff --git a/README.md b/README.md
index 5c6a1ed0..a8972ca8 100644
--- a/README.md
+++ b/README.md
@@ -14,18 +14,18 @@ First configure your `.envrc` and run
   python manage.py runserver
 ````
 
-- Option 2: using docker-composer
+- Option 2: using docker compose
 
 For the first time you need to run in root project directory
 
 ```shell
 ./manage env --comment --defaults > .env
-docker-compose build
-docker-compose up
+docker compose build
+docker compose up
 ```
 
 each next time
 
 ```shell
-docker-compose up
+docker compose up
 ```
diff --git a/docker-compose.yml b/compose.yml
similarity index 64%
rename from docker-compose.yml
rename to compose.yml
index 671bca04..c80894cb 100644
--- a/docker-compose.yml
+++ b/compose.yml
@@ -1,5 +1,3 @@
-version: '3.7'
-
 volumes:
   db:
 
@@ -12,21 +10,26 @@ services:
     build:
       context: ./
       dockerfile: ./docker/Dockerfile
+      target: dev
+    command: dev
+    # FIXME: if the below lines are uncommented, then __pypackages__ get lost
+    # volumes:
+    #   - ./:/code/
     ports:
       - "8000:8000"
-    volumes:
-      - ./:/code/
-    command: "dev"
     depends_on:
       - db
+      - redis
+
   db:
-    image: mdillon/postgis:11-alpine
+    image: postgres:16
     volumes:
       - db:/var/lib/postgresql/data
     env_file:
       - .env
+
   redis:
-    image: redis:4.0.11-alpine3.8
+    image: redis:7
     restart: unless-stopped
     expose:
       - "6379"
diff --git a/docker/Dockerfile b/docker/Dockerfile
index d2675e5c..5c9cdb76 100644
--- a/docker/Dockerfile
+++ b/docker/Dockerfile
@@ -1,4 +1,4 @@
-FROM python:3.11-slim-bullseye
+FROM python:3.11-slim-bullseye as base
 ARG BUILD_DATE
 ARG VERSION
 
@@ -64,3 +64,8 @@ ADD ./docker/bin/* /usr/local/bin/
 
 ENTRYPOINT ["/usr/local/bin/entrypoint.sh"]
 EXPOSE 8000
+
+FROM base as dev
+RUN pdm sync --dev
+
+FROM base as dist
diff --git a/ops/compose.test.yml b/ops/compose.test.yml
new file mode 100644
index 00000000..240c9a89
--- /dev/null
+++ b/ops/compose.test.yml
@@ -0,0 +1,23 @@
+services:
+  backend:
+    stdin_open: true
+    tty: true
+    env_file:
+      - test.env
+    image: ${backend_image}
+    ports:
+      - "8000:8000"
+    depends_on:
+      - db
+      - redis
+
+  db:
+    image: postgres:16
+    env_file:
+      - test.env
+
+  redis:
+    image: redis:7
+    restart: unless-stopped
+    expose:
+      - "6379"
diff --git a/ops/test.env b/ops/test.env
new file mode 100644
index 00000000..a0253933
--- /dev/null
+++ b/ops/test.env
@@ -0,0 +1,11 @@
+SECRET_KEY=secret-key
+
+DATABASE_URL=psql://postgres:postgres@db:5432/postgres
+CACHE_DEFAULT=redis://redis:6379/0
+STATIC_URL=/static/
+STATIC_ROOT=/var/static/
+
+POSTGRES_DB=postgres
+POSTGRES_USER=postgres
+POSTGRES_PASSWORD=postgres
+POSTGRES_HOST=db
\ No newline at end of file
diff --git a/pyproject.toml b/pyproject.toml
index 7cc2c681..eb39f5e9 100644
--- a/pyproject.toml
+++ b/pyproject.toml
@@ -124,6 +124,7 @@ exclude = '''
   | dist
   | migrations
   | snapshots
+  | __pypackages__
 )/
 '''