Project-based organisations are increasingly becoming an important originator of innovations. Innovation in project-based organisations faces particular challenges due to issues of resource allocation, feedback and learning, corporate governance and client relationships. As innovation and capability accumulation in these organisations occurs largely in the context of project execution, the resources available for innovative work within projects, as well as the type and complexity of these projects, are a major influence on innovative performance. The strategies employed for the acquisition of new work represent a key lever in determining innovative outcomes. Drawing on the growing literature of project-based organisations in general, in particular innovation in project environments and contributions of scholars studying engineering design and project management, this paper presents a conceptual approach - linking work acquisition, learning and innovation in project-based service organisations. This theory is expressed in diagrammatic form, providing a succinct representation of the complex relationships in addition to providing a starting point for an analysis of the challenges facing the management of project-based organisations, in particular, the vicious circles potentially impeding success. This analysis can help to elucidate findings from prior in-depth studies of a large number of engineering and design firms.