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This report discuss Problem-Based and Project-Based Learning (PBL) as an approach to meeting the demand for the educational requirements of the next generation engineering graduates. The report is prepared as the final report of the Special Interest Group (SIG) B5 of the Erasmus Thematic Network Project TREE (Teaching and Research in Engineering Education) on ProblemBased and Project-Based Learning. In engineering education there is a shift in emphasis from professional skills to process skills. These skills include problem analysis and problem solving, project management and leadership, analytical skills and critical thinking, dissemination and communication, interdisciplinary competencies, intercultural communication, innovation and creativity, and social abilities. PBL is an instructional method that challenges students to learn to learn, working cooperatively in groups to seek solutions to real world problems. These problems are used to engage students' curiosity and initiate learning the subject matter. PBL prepares students to think critically and analytically, and to find and use appropriate learning resources. PBL is both a curriculum and a process. The curriculum consists of carefully selected and designed problems that demand from the learner acquisition of critical knowledge, problem solving proficiency, self-directed learning strategies, and team participation skills. The process replicates the commonly used systemic approach to resolving problems or meeting challenges that are encountered in life and career. This report gives a survey of PBL and several best practice examples from Europe, and discusses how an institution can change to PBL. The conclusion of this report is that PBL can, regardless of discipline, enhance students' achievement of both professional skills and process skills. Therefore European higher education institutions should consider shifting to PBL. The shift to PBL cannot be accomplished as a sudden change. It should be considered as a strategic change and the necessary measures should be taken for successful completion of change.