Make the Necessary Measurements
Measure your walls and make a plan drawing of your wainscoting project. Note locations of fixtures, electrical outlets, etc. Use a level to check your corners for plumb. If not plumb, mark plumb lines on the wall to use as reference points.
Note: Take this time to plan out where you want the ends of the plywood to fall on the wall. On this project, we are placing our stiles every 4', which means our plywood butt joints must fall at 4' or 8' increments. The stile is the vertical part of the trim that covers the butt joints of the plywood.
Mark the walls with your top-level line. This line will represent the top of your 3/4 ply. Find the highest point on the floor along the walls. From this point, measure up 1/4" higher than the height of your ply. This will allow a gap between the bottom of the ply and the floor. The oak bottom rail will eventually cover this gap.
From this mark, use a chalk line with a water level or a 6' level to draw a line all away around the room.
Mark where the ends of the plywood (butt joints) will fall on this line.