The objectives of this project were to (1) develop a criterion-referenced test of clinical performance capable of evaluating skill mastery, (2) establish congruent validity, (3) establish degree of inter-rater agreement, (4) determine whether performance expectations were the same for challenge exam applicants as for course-enrolled students, (5) develop a manual for applicants, and (6) develop a manual for evaluators. Forty-eight skills taught during the first nursing course were identified, and the critical requirements were refined. Eighteen of the critical requirements developed were put through a pilot test utilizing students from the first nursing course. Six students completing the course were rated simultaneously by the two test developers. Two students were rated in the nursing laboratory and four in the hospital. Comparison of the students' actual performance of each skill with the criterion established for successful completion of each skill indicated that the students were able to meet the expected performance criteria in 50 percent of the skills performed. Analysis of the data indicated a high percentage of rater agreement when observation of skills was made simultaneously and independently by two persons. (The critical requirements for basic nursing skills are appended.) (LRA)