There exists an increasing evidence of benefits with involving suppliers in a new product development activity in the mass production companies. Challenges such as, reduction of a product life cycle, technological uncertainties, and increased cost of R&D activity have made it necessary to extend a new product development activity, beyond the firm’s boundary. However, in a project based industries this trend is not predominant and importance of innovation and suppliers, applies to this industry also. Hence, Objective of the thesis is to establish a framework for involving suppliers for a project based industry. The qualitative research makes use of extensive literature within the field, product development, innovation and project based industry and supplier involvement in product development. Several interviews were carried out for collection the empirical data at the case company, which is a project based organization. Required framework, a result of the thesis is achieved through an extensive empirical analysis.The results show that a value of innovation is different between the project based industries and the mass production industries and it is perceived differently. However, innovation is equally important for a project based industry and it has a potential to include innovation within its processes. On this regard, several challenges and innovation promoting elements have been identified. Project management techniques and disruption in the knowledge transfer are some of the impediments for innovation within project based industries. The thesis provides the suggested framework to overcome these challenges and increase innovation in a project based industry and involves suppliers in its innovative and development activities.