Guidelines and resources for conducting a faculty evaluation were developed based on an evaluation project at Irvine Valley College (California). In the fall of 1989, eight instructors participated in a pilot test of evaluation through observation by two peers and the collection of rating forms completed by students. Participants also completed project evaluation forms, which were used to develop the spring 1990 pilot test. Seven instructors from Irvine Valley College and 14 from Saddleback College participated in this second pilot project. The revised procedures included: peer observation; student feedback; and self-evaluation. The results indicate that the following factors should be built into the faculty evaluation process: (1) checks and balances; (2) due process; (3) flexibility; (4) a built-in instructional development component; (5) use of qualified instruments; (6) careful weighing of the costs and usefulness of peer observations; (7) combination of summative and formative evaluation; and (8) sensitivity as to where the evaluation is "housed." Resources for developing a faculty evaluation and development system are listed. Project documentation and instruments used, and a 36-item bibliography on faculty evaluation are included. (SLD)