This paper presents an approach to conducting formative assessment of student coursework within diagram-based domains using Computer Based Assessment (CBA) technology. Formative assessment is perceived as a resource-intensive assessment mode and its usage is in steep decline in higher education. CBA technology developed out of the desire to automate assessment due to the necessity of assessing students with decreasing unit-resource; it can overcome the decline in formative assessment by automating those processes which are considered resource-intensive.The system described is based upon the CourseMarker CBA system (formerly CourseMaster / Ceilidh) and the DATsys object-oriented framework for CBA-oriented diagram editors. This paper outlines requirements for obtaining good formative assessment using CBA software and documents a live system which assessed student Entity Relationship diagrams within an undergraduate Database Systems course. Results are presented and considerable extensions proposed.