Milestones 1 is the same for everybody.
For the actual project, go through Milestones 2-6. 

Choose a project topic from the topics listed here. 

In simple terms, you will perform top-down design and bottom-up implementation. 

For the top-down design part, understand the overall circuit design which consists a datapath unit and a control unit. The datapath unit contains many modules. Break the design into smaller and smaller components until you reach a level suitable for schematic capture design entry.

Then, perform the bottom-up implementation task.

A tutorial for implementing a serial adder is here. You can use it as a template for your final report.