Read the entire piece through once. This initial reading is for a general impression of the work. Don’t skim, but avoid laboring over specific elements of the piece. If you see an occasional spelling error or typo, go ahead and mark it. If there are numerous mistakes throughout the piece, just add a general request for a spell check at the top of the story.
After the first reading, write a short paragraph giving your initial impression. Keep your comments constructive. If you found your mind wandering during the story, don’t just remark that you were bored. Find sections that held your attention, and suggest the writer keep that pacing throughout the piece, pinpointing the sections that could use some work. If one character left you cold, credit the characters that you found compelling, and suggest the lacking character be developed more like those. If the humor in the piece fell flat, find the author’s strengths (action, dialogue, description, etc.), and suggest leaving the humor out to let those strong points shine through.
Now do a second, closer, reading. This read is for continuity, character development, dialogue, descriptive passages and plot points. Make notes in the margin (or in a word processor file, if reading online, noting the page and paragraph in question before each comment) as you go. Try to note the writer’s strengths as well as weaknesses. What were your favorite moments? Which descriptions made you feel most present? Which character(s) did you find most compelling? Did any plot shifts pleasantly surprise you? Did you feel lost at any point? Does the plot seem plausible? Is the pacing good, or did you feel rushed, or find yourself getting restless waiting for something to happen? Are there any continuity errors, like sudden name changes or location shifts?
Review the paragraph you wrote after your initial reading, adding any specifics that might clarify your first impression. Maybe your first reading left you wanting more action and less dialogue, but after your second read, you realized it was only one section of dialogue that was a problem for you. Again, keep it constructive. Harsh criticism won’t help the writer develop her strengths to make up for her weaknesses, it will just leave her feeling inadequate. Likewise, don’t give a review of pure praise, unless you truly found the story flawless. Help the writer craft this story into the best work it can be.