There are different ways to do this obviously.
I prefer the following method:
1.) Tape up your paper pattern.
2.) Determine the highest point of the wall (the portion that sticks out further than the rest) that falls within your pattern area.
3.) Draw a large circle (12" or so) on your pattern around the high point. Note which letter(s) fall within that circle.
4.) Drill your holes. For holes where your bit will likely slip (on steep edges, etc.), use a China marker/grease pencil/Sharpie to mark the location on the wall.
5.) Once your holes are drilled, install the letter(s) closest to (or directly over) the high point. That will be the letter you base all of the others off of since that's your highest point.
6.) There's usually some feature on the building you can eye the edge of the letter up with to ensure the letter face is parallel to the wall. If not, hopefully you have a good eye...that helps tremendously.
7.) Use a plastic level (to keep from marring the letter faces) and using that first letter, you can ensure all other letter faces are even with each other.
8.) Dry fit letters before applying silicone. Often in masonry surfaces, the aggregate can affect the direction of your bit. If your bit goes in crooked, it can make the letter "pull" and it's difficult to get it to stay plumb. If this happens, thread a nut onto the stud (or use pads), then put the letter in the wall. Adjust the letter to where it needs to be and back the nut (or pad) against the wall. Then take the letter out, apply silicone and install. The nuts are a little less visible than the pads, but both serve the same purpose.
9.) Assuming you're using 10-24 studs, bring a 1/4" bit in addition to your 3/16" bit. If your bit wanders, you may need to enlarge a few holes to help adjust the letters.