This article presents a study that aims at constructing a teaching framework for software development methods in higher education. The research field is a capstone project-based course, offered by the Technion's Department of Computer Science, in which Extreme Programming is introduced. The research paradigm is an Action Research that involves cycles of data collection, examination, evaluation, and application of results. The research uses several research tools for data gathering, as well as several research methods for data interpretation. The article describes in detail the research background, the research method, and the gradual emergence process of a framework for teaching software development methods. As part of the comprehensive teaching framework, a set of measures is developed to assess, monitor, and improve the teaching and the actual process of software development projects. (Contains 1 note, 7 tables and 1 figure.)