This paper deals with a required methods course, based on the national curriculum of science and technology for junior high schools. The course participants are pre-service teachers who study towards a B.Sc. degree in education in science and technology parallel to their studies in one of the faculties of sciences or engineering. Working in small teams, the students carry out a project in a Project-Based Learning (PBL) environment. The final outcomes of the project are group and individual written reports, a portfolio, a multimedia presentation and a physical model. The research question was: what implementation issues and processes do higher education students encounter in a Project-Based Learning environment which involves an alternative assessment approach? Qualitative and quantitative tools for collecting data included "the participant as observer" observations at the classroom, semi-structured interviews with students, questionnaire, and analysis of students' reports and products. The findings relate to the advantages of PBL from the students' point of view, the challenges students experienced and perceived while conducting their projects, and the benefits students may gain from formative assessment. (Contains 1 table.)