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In this paper, we present a novel instructional approach introduced to the final year engineering students with the aim of developing their generic and professional competences. The proposed approach, based on project and problem based learning and ill-structured problem solving, was analyzed in the context of competence development and implications for engineering educators. The results of our action research indicate that the generic competences that were found to be significantly fostered were: Systems thinking, ambiguity tolerance, asking questions, solving ill-structured problems, ability to apply knowledge in practice, presentation and generating new ideas. Professional competences that were found to be significantly fostered all belong to higher order thinking skills, and include the ability to design and evaluate, analyze, interpret and create new engineering solutions. These findings provide empirical support for the use of applied student-centered strategies for developing competences relevant for future work, as well as reflections that can support engineering educators in designing similar teaching and learning environments. © 2018 TEMPUS Publications.