diff --git a/lib/utils.js b/lib/fuzzyTopN.js
similarity index 94%
rename from lib/utils.js
rename to lib/fuzzyTopN.js
index 90e82d1..44f0f6e 100644
--- a/lib/utils.js
+++ b/lib/fuzzyTopN.js
@@ -1,4 +1,4 @@
-export function fuzzyTopN(searchTerm, list, n, min) {
+export default function fuzzyTopN(searchTerm, list, n, min) {
   function modifiedLevenshtein(a, b) {
     const m = a.length
     const n = b.length
diff --git a/lib/setModel.js b/lib/setModel.js
new file mode 100644
index 0000000..c4f33a1
--- /dev/null
+++ b/lib/setModel.js
@@ -0,0 +1,139 @@
+import cds from '@sap/cds'
+import fs from 'fs'
+
+// Ensures only one CDS model compilation is ever in-flight.
+// The moment setModel is called, cds.model is set to a promise.
+// All consumers must await cds.model if it's defined.
+export default async function setModel(path) {
+  if (cds.model) {
+    // If cds.model is a promise, await it; if it's resolved, return it
+    if (typeof cds.model.then === 'function') await cds.model
+    return
+  }
+  // Assign a promise immediately to cds.model to prevent duplicate compilations
+  cds.model = (async () => {
+    const compiled = await loadModel(path)
+    cds.model = compiled
+    return compiled
+  })()
+
+  await cds.model
+}
+
+// Global cache object for CDS file timestamps
+const cache = { cdsFiles: new Map() }
+let changeWatcher = null
+
+async function cdsFilesChanged(path) {
+  if (path.endsWith('/')) path = path.slice(0, -1)
+  const files = cds.resolve(path + '/*')
+  const currentTimestamps = new Map()
+  await Promise.all(
+    files.map(file =>
+      fs.promises
+        .stat(file)
+        .then(stat => {
+          currentTimestamps.set(file, stat.mtimeMs)
+        })
+        .catch(() => {
+          /* File might have been deleted between resolve and stat */
+        })
+    )
+  )
+
+  const _hasChanged = () => {
+    if (currentTimestamps.size !== cache.cdsFiles.size) {
+      return true
+    }
+    // Check for changed timestamps
+    for (const f of files) {
+      const prev = cache.cdsFiles.get(f)
+      const curr = currentTimestamps.get(f)
+      if (prev !== curr) {
+        return true
+      }
+    }
+  }
+  if (_hasChanged()) {
+    cache.cdsFiles = currentTimestamps
+    return true
+  }
+  return false
+}
+
+// Loads and compiles the CDS model, returns the compiled model or throws on error
+async function loadModel(path) {
+  cds.root = path
+  const startTime = Date.now()
+  const loaded = await cds.load('*', { docs: true, locations: true })
+  if (!loaded || (Array.isArray(loaded) && loaded.length === 0)) {
+    throw new Error(`Failed to load CDS model from path: ${path}`)
+  }
+  const compiled = cds.compile.for.nodejs(loaded)
+  if (!compiled || !compiled.definitions || Object.keys(compiled.definitions).length === 0) {
+    throw new Error(`Compiled CDS model is invalid or empty for path: ${path}`)
+  }
+  const serviceInfo = cds.compile.to.serviceinfo(compiled)
+
+  // merge with definitions
+  for (const info of serviceInfo) {
+    const def = compiled.definitions[info.name]
+    Object.assign(def, info)
+  }
+
+  const _entities_in = service => {
+    const exposed = [],
+      { entities } = service
+    for (let each in entities) {
+      const e = entities[each]
+      if (e['@cds.autoexposed'] && !e['@cds.autoexpose']) continue
+      if (/DraftAdministrativeData$/.test(e.name)) continue
+      if (/[._]texts$/.test(e.name)) continue
+      if (cds.env.effective.odata.containment && service.definition._containedEntities.has(e.name)) continue
+      exposed.push(each)
+    }
+    return exposed
+  }
+
+  // construct endpoint for each entity and add it to its definition
+  compiled.services
+    .flatMap(srv => srv.endpoints.map(endpoint => ({ srv, endpoint })))
+    .map(({ srv, endpoint }) => {
+      const entities = _entities_in(srv)
+      for (const e of entities) {
+        const path = endpoint.path + e.replace(/\./g, '_')
+        const def = compiled.definitions[srv.name + '.' + e]
+        def.endpoints ??= []
+        def.endpoints.push({ kind: endpoint.kind, path })
+        // Add fully qualified entity names to each service as 'exposedEntities'
+        for (const service of compiled.services) {
+          service.exposedEntities = _entities_in(service).map(shortName => service.name + '.' + shortName)
+        }
+      }
+    })
+
+  const endTime = Date.now()
+  const compileDuration = endTime - startTime
+
+  // Only do it once
+  if (!changeWatcher)
+    changeWatcher = setInterval(
+      async () => {
+        const hasChanged = await cdsFilesChanged(path)
+        if (hasChanged) await refreshModel(path)
+      },
+      Math.max(compileDuration * 10, 20000)
+    ).unref() // 10 times the initial compile duration seems reasonable, at least 20 seconds
+  return compiled
+}
+
+// Refreshes the CDS model, only replaces cds.model if compilation succeeds
+async function refreshModel(path) {
+  try {
+    const compiled = await loadModel(path)
+    cds.model = compiled
+    return compiled
+  } catch (err) {
+    // If anything goes wrong, cds.model remains untouched
+  }
+}
diff --git a/lib/tools.js b/lib/tools.js
index b034fe1..ccd37d2 100644
--- a/lib/tools.js
+++ b/lib/tools.js
@@ -2,67 +2,11 @@
 
 import cds from '@sap/cds'
 import { z } from 'zod'
-import { fuzzyTopN } from './utils.js'
+import setModel from './setModel.js'
+import fuzzyTopN from './fuzzyTopN.js'
 
-const PROJECT_PATH = { projectPath: z.string().describe('Root path of the project') }
-
-// Ensures only one CDS model compilation is ever in-flight.
-// The moment setModel is called, cds.model is set to a promise.
-// All consumers must await cds.model if it's defined.
-async function setModel(path) {
-  if (cds.model) {
-    // If cds.model is a promise, await it; if it's resolved, return it
-    if (typeof cds.model.then === 'function') await cds.model
-    return
-  }
-  cds.root = path
-  // Assign a promise immediately to cds.model to prevent duplicate compilations
-  cds.model = (async () => {
-    const loaded = await cds.load('*', { docs: true, locations: true })
-    const compiled = cds.compile.for.nodejs(loaded)
-    const serviceInfo = cds.compile.to.serviceinfo(compiled)
-
-    // merge with definitions
-    for (const info of serviceInfo) {
-      const def = compiled.definitions[info.name]
-      Object.assign(def, info)
-    }
-
-    const _entities_in = service => {
-      const exposed = [],
-        { entities } = service
-      for (let each in entities) {
-        const e = entities[each]
-        if (e['@cds.autoexposed'] && !e['@cds.autoexpose']) continue
-        if (/DraftAdministrativeData$/.test(e.name)) continue
-        if (/[._]texts$/.test(e.name)) continue
-        if (cds.env.effective.odata.containment && service.definition._containedEntities.has(e.name)) continue
-        exposed.push(each)
-      }
-      return exposed
-    }
-
-    // construct endpoint for each entity and add it to its definition
-    compiled.services
-      .flatMap(srv => srv.endpoints.map(endpoint => ({ srv, endpoint })))
-      .map(({ srv, endpoint }) => {
-        const entities = _entities_in(srv)
-        for (const e of entities) {
-          const path = endpoint.path + e.replace(/\./g, '_')
-          const def = compiled.definitions[srv.name + '.' + e]
-          def.endpoints ??= []
-          def.endpoints.push({ kind: endpoint.kind, path })
-          // Add fully qualified entity names to each service as 'exposedEntities'
-          for (const service of compiled.services) {
-            service.exposedEntities = _entities_in(service).map(shortName => service.name + '.' + shortName)
-          }
-        }
-      })
-    // After compilation, replace cds.model with the resolved model
-    cds.model = compiled
-    return compiled
-  })()
-  await cds.model
+const PROJECT_PATH = {
+  projectPath: z.string().describe('Root path of the project')
 }
 
 const tools = {