To make this work, simply navigate to your project directory and execute the following command:
compass init
By doing this, a "working" config.rb file will be created along with sass and stylesheets directories, as well as some initial scss files.
If you want to customize or use different directories, you can edit the newly generated config.rb file and update the directories according to your preference (followed by deleting the automatically created ones).
Once you have completed these steps, you can then proceed to execute:
compass watch
This will ensure that your scss files are compiled into css files successfully. Alternatively, you can also utilize a GUI tool for this process.
For more detailed information, refer to the compass documentation available here