Measure the width and height of the basement walls you'll be covering. Sketch out a diagram so you'll know how many panels you'll need to purchase. Insulation sheathing panels are typically sold in 4-by-8-foot panels.
Measure and cut your panels as necessary. To cut panels, simply score them with a utility knife and snap off the excess panel. It's best to make the cuts as you install each panel, rather than trying to cut all the panels first. This way small errors in measurements don't add up, causing you to waste panels.
Place the first panel at the right corner of the wall. Place a level on the left edge of the panel and check to be sure the panel is plumb. In most cases it will be unless the adjoining wall is out of plumb. If it is, trim away a little of the right edge of the panel until the left side is plumb.
Apply construction adhesive to the back of the panel. Place the panel against the wall, and press firmly on it until it is securely stuck to the wall.
Apply your next panel, working to the left. Butt the panel firmly against the first panel, and attach it to the wall with adhesive. Continue across the wall until you've covered it with insulation sheathing. Tape over the seams between the panels with vinyl tape to prevent drafts.