The U.S. Department of Education awarded 19 Challenge Grants for Technology in Education in fiscal year 1995, and planned to award additional grants in fiscal year 1996. The diverse projects are intended to mobilize resources, develop technology enabled learning environments, and provide lessons to others seeking to make effective use of technology in education. Each grantee is required to carry out a project evaluation. This sourcebook provides guidance and materials to support the development and implementation of evaluations by the project managers and evaluators of the Challenge Grants. The sourcebook will be used in workshops for project leaders to discuss the projects and program evaluations, and by project leaders to perform their evaluations. The sourcebook is intended to be suggestive and helpful rather than prescriptive. The sourcebook also provides background materials for national meetings of the project leaders and evaluators to help further develop a collaborative relationship among project leaders, evaluators, and the Challenge Grant Program Office. Evaluation serves three distinct purposes by providing: (1) regular, structured, and objective feedback to project leaders and other participants; (2) documentation of project outcomes and lessons learned; and (3) accountability to funders and key stakeholders. Topics covered include: evaluation design issues, progress assessment, and how to use the sourcebook materials. Appendices comprising the majority of the document include formats and templates for creating a progress assessment portfolio; an annotated bibliography; list of contacts; sample of planning and data collection instruments; a list of data collection instruments; and an example reform portfolio. (Author/SWC)