I just checked the InstalledEngineBuild.xml in promoted branch and the Local Installed Directory is still in your root directory like this:
<Property Name="LocalInstalledDir" Value="$(RootDir)/LocalBuilds/Engine/Windows"/>
The actual process of using this tool is like this:
1: Download Unreal Source.
2: Run Setup.bat.
3: Get a coffee and wait till setup.bat finishes.
4: Run GenerateProjectFiles.bat.
5: Open UE4.sln
6: In Solution Explorer under Programs, right click on AutomationTool and select build. This will build and create the AutomationTool.exe.
Once all the steps above are done, you can start this app and select the AutomationTool exe file, check the options and Build. The log at the right side gives you the output of AutomationTool so you can see if the build failed or no.
Hope this helps. 