Indicator checklists (questionnaires or checklists that contain selected predictive items from longer, comprehensive instruments) are used by states to monitor the conformance of human service providers with state requirements. This guide provides instructions for developing such a checklist as part of an instrument-based program monitoring system. The resulting instrument is intended for use by managers and technical specialists responsible for monitoring systems. It is pointed out that, although the guide focuses on monitoring systems for child day care, indicator checklists are potentially useful in other human service areas as well (e.g., foster care). The first section of the guide provides a brief introduction. The second section describes the origin of the indicator checklist concept as part of instrument-based monitoring and discusses the advantages of developing a checklist. The third section provides step-by-step instructions for constructing an indicator checklist based on an existing comprehensive instrument. The fourth section suggests ways of integrating the use of indicator checklists with comprehensive instruments and provides ideas on implementation. Appendices contain detailed information on technical issues such as quantitative methods for selecting particular predictor items. (RH)