[Full credit for this method goes to Tim Grahl at Blue Collar Mountain Biking. I've only reproduced it here to make sure it's available for our readers. —Alan]
You’ll need a 5mm hex wrench and a Torx T-25 driver. Let’s start with the assumption that the rotor, caliper, and cable are properly installed on the bike, and that the rotor is true.
1. Loosen the (2) black CPS mounting bolts with a 5mm hex wrench to a point where the caliper body can move freely.
2. Loosen the inboard pad adjustment knob using a Torx T-25 driver.
3. Slide a business card between the outboard, fixed brake pad and the rotor (be sure the biz card is between the outboard fixed pad and the rotor, not the inboard adjustable pad and the rotor), then tighten the pad adjustment knob until the rotor and business card are snugly clamped between the brake pads (you should not be able to pull out the business card). This aligns and centers the caliper over the rotor while leaving a business-card-sized gap on the fixed side.
4. With the business card still in place, re-tighten both CPS bolts to lock the caliper in place.
5. Loosen the pad adjustment knob and remove the business card.
6. Tighten the pad adjustment knob until the pad just barely touches the rotor, then back off one click to eliminate pad/rotor contact.
This method is more precise than the method outlined in the Avid BB5 Instruction Manual. It perfectly aligns and centers the caliper body and brake pads over the rotor. I’ve found it to be the most consistent way to minimize lever throw and ensure full engagement when using BB5 road calipers and road levers. And once you’ve done it a couple of times, it takes all of 5 minutes.