I use a combination of summative and formative assessment. Performance-based summative assessment is made using an objective driven rubric. The objectives that are being taught and which students are expected to display are listed, as well as a description of each level of achievement. Students are graded on how well they meet the objectives, not on how they compare to the rest of the class.
Paper-based summative assessments utilize items that require higher cognitive skills and include essays, categorizing problems and short answer. I avoid simple multiple choice questions or other items that require only recall and not application, interpretation or other complex skills.
Formative assessments include teacher-directed class discussions, journal entries on any number of technical or aesthetic problems, checklists for art or thought processes, and mid-project critiques, to name a few. I also like to use surveys to see if the lesson is enjoyable, if there are any fuzzy areas in my instruction, to discover student interests which could be incorporated into the curriculum, and to determine students’ prior knowledge.