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Software Engineering capstone projects have been running successfully since 2002 for the final year software engineering (SE) students of the Bachelor of Software Engineering (BSE) Program at Monash University, accredited by Engineers Australia and Australian Computer Society. Agile methods are being increasingly adopted in the industry. In this paper, we describe the objectives of SE capstone projects and report on how our innovative projects for supporting the software engineering projects in undergraduate programs at Monash University have evolved and have been scaled up to support agile SE capstone projects. We detail the evolution from our early innovative software engineering projects in the mid 1990s that have served as catalysts for more innovation in the early 2000, and for scaling up agile SE projects with increasing central technical infrastructure support from the School. More recently, we have adapted our approach with a combination of open-source and commercial tools under academic licence for developing and deploying these projects effectively with agile distributed teams. The paper concludes with a discussion on lessons learnt from our innovative projects in the mid 1990s and from the evolution in scaling up to agile practices for the SE capstone projects from 2002-2008. [ABSTRACT FROM AUTHOR]