This paper examines the value of using industry based projects to develop the problem solving skills of first year Bachelor of Engineering students as part of Project Based Learning (PBL) pedagogy. The examination begins by reviewing traditional methods of engineering education then compares and discusses this in relation to industry trends and the desirable attributes of graduate engineers as seen by Engineers Australia and engineering employers. The paper examines the benefits of first year engineering students completing industry based engineering projects as a teaching methodology by non-participant direct observation and compares the results to the findings of previous researchers in the field. This paper concludes that as a result of industry based team projects combined with PBL, engineering students gain increased levels of problem solving skills, greater learner motivation, higher levels of learner autonomy and develop a thought process consisting of: define, research, analyse, solve, report.