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When creating a build configuration it is important to configure the sequence of build steps to be executed. Each build step is represented by a build runner and provides integration with a specific build or test tool. You can add as many build steps to your build configuration as needed. For example, call a NAnt script before compiling VS solutions.
Build steps are invoked sequentially. If a build step fails the rest are not executed.
If you have enabled "Fail build if at least one test failed" condition in the General Settings of build configuration, TeamCity will continue executing build steps that go after test runner, but the build will be marked as failed.
In the end, the build gets merged status and the output goes into the same build log.
For the details on configuring individual build steps, refer to: