The type of project you would work on with your undergraduates will be largely up to the two of you to decide.  If you have an idea for one, you can work on an original research project related to your own research (ideal for advanced undergrads). If not, you may also guide the undergrad through an advanced problem that is not necessarily new research, but something beyond the scope of undergrad courses (ideal for less advanced undergrads). The amount of time and effort spent on this project is also entirely up to each pair. Take a look at these past projects for reference.

The usual timeline would be to have undergraduate-graduate student matches by the beginning of November. Then, the rest of this semester and winter break can be used for background reading and getting acquainted with the subject area. The bulk of the project would take place during the spring semester. At the end of the spring semester, the undergrads will be given the opportunity to present their work (at least within the department, but also potentially at an outside conference).

Being an undergrad research mentor should be a very rewarding experience and of course a great CV item. 

Become a mentor!