A method of developing measurement instruments to assess academic achievement in proficiency-based education is presented. Materials and exercises are sequenced to correspond to major activities which must be completed in developing local assessment systems. The exercises contained in this workshop guide have been field tested and can be followed by both large and small districts. The method is comprised of ten steps: (1) establishing a school philosophy; (2) identifying educational goals; (3) developing performance objectives for each goal; (4) identifying pupils' skills to be assessed; (5) selecting or constructing measurement instruments; (6) setting performance standards; (7) developing procedures for monitoring student proficiencies and reporting data; (8) implementing the assessment procedures and collecting data; (9) making decisions about students' needs based on the data; and (10) adjusting curricula and programs according to the evaluation results. Test validity and test reliability are also discussed. (MH)