Tools & Techniques for Skills Assessment

simple excel to track it is best as it keeps it straight and simple to view.
1) note down all the skills those are required for your project objective to be achieved in rows
2) note down all the employee names in the columns
3) Give rating at each intersection cell for each skill/each employee
4) color code the cells to have better visibility as this will helpful you to plan for upbringing of the employees to desired level in future.

We do the same thing as Saurabh mentioned. We mention desired level and actual level of each skill against each candidate and identify the gaps.

It is always nice to consider "rewards" to the team or team members upon successful completion of the project or after reaching a critical milestone, it helps keeping the hard works and spirits up!

Currently we use Excel sheets for self assessments of skills. The Excel sheets are developed based on the required skills for Job roles which are defined jointly with HR. For project managers, as a general base we used the PMI Talent Triangle and for the technical PM part the PM tasks as describes in PMP Exam Content Outline (ECO). PMI intends to publish their Competence Development Framework in Q2, which we will then look at.