The Margin of Error Is Slim
The first thing you want to do is establish level lines on the wall at the height of the new ceiling. Remember that the code may require a minimum floor-to-ceiling height, usually 7.5-feet. Also, you may need at least 5-inches between any lighting fixture and the old ceiling. Try to leave as large a cavity as possible, a minimum of 2-inches, if no lighting fixtures are involved.
Marking the level lines can be rather simple if your floor is level. In this case, all you need to do is measure the height in each corner of the room (in our example, 8-feet). Mark the walls pop chalk lines connecting these points. You now have a level line running around the wall at ceiling height You will nail your wall molding at this level.
The only problem here occurs if your floor is sloping. Then, if you measure up an equidistance at the corners, the ceiling will slope to match your floor. To avoid this error, determine if your floor is level. You may be able to eye this, or use a level, or even a steel ball to see if it rolls to one area. If the floor is off level to any great degree (.25-inches" or more), you will need to determine the difference at each corner and adjust your measurements.
A long, 8' level can be used here. Hold it level and determine the dip or rise of your floor. Perhaps you can measure down from the ceiling or joists above if they are level. Another method is to simply use a long level and just draw a line on all the walls starting from one point.
Next you will need to pre-punch holes in the wall molding to correspond with the wall studs. You can locate these wall studs by tapping on the wall with your hammer and listening for a solid sound. You can also use stud locators, which use magnets attracted to the wall covering nails.
Nail the wall molding to the wall around the entire perimeter of the room with the top edge of the molding lining up with the chalk line. If you are fastening it to a concrete block wall, use short masonry nails and direct the nail between the mortar joints and the edge of the block. If the wall is solid concrete or otherwise unable to accommodate wall molding, hang a section of runner directly next to the wall as a substitute.