Not sure what installdir, builddir and srcdir to use

[ComputerU]

Hi,

I'm really new to linux and this is essentially part of the first large program I'm trying to install. I was hoping you could tell me how to set my source, build and install directories properly. I don't know what is meant by $(pwd) or $HOME/local. Should I just leave these directories as is or should I write my own locations?
srcdir=$(pwd)
builddir=build
installdir=$HOME/local

Sorry if this is really obvious.