It's a good idea to build a model of the dummy's head out of non-hardening clay. With the clay model, you can easily correct mistakes or add or subtract material as needed. Because the mechanism to operate the dummy's mouth takes a lot of space, and because you need to provide a hollow space inside the head and behind the mouth to allow for it, it makes sense to build the mechanism first, or to have a purchased one on hand. Use the actual mechanism to plan the size of the head and the size and placement of the cavity. Do the same with the eyes and the eye-controlling mechanism, if you're using them. (You could choose to carve eyes into the face instead of installing movable doll eyes into a carved eye socket.) Temporarily install (or hold in place) the mechanism and then operate it, noting how much extra hollow space you need to allow unrestricted operation of the mechanism.
The dummy should have an access door into the back of the head so that this mechanism can be repaired or replaced easily. Usually, this door is covered by a doll wig, but carefully carved "hair" could also disguise the access door.
For a carved dummy head, a separate lower lip and jaw section will work best for the working part of the mouth. To allow for the motion, cut away a section of the lower neck below the jaw.
Mount the clay head model on a section of broomstick, or a dowel of similar width. The puppet stick (the apparatus that controls the mouth mechanism and the movement of the head) that you build later will be of the same size, so your head model will have the right size hole in the bottom.
Some ventriloquist dummies have sophisticated controls that allow winks, raised eyebrows, ear wiggles and even hair that stands on end. These will complicate your design, and perhaps require even more space within the dummy's head. Allow for them in your clay head model, as well.
After you've molded a clay head that not only adequately houses all the necessary mechanisms, you can focus on the facial features. Use small indentations for the nostrils rather than making them hollow, and provide a strong chin to the face to accommodate the moving lower jaw and hinge. Broad, strong features work best for ventriloquist dummies: Big noses, prominent ears, large eyes and strong brow bones make the face easy to see, especially for audiences at some distance from the dummy.
When you're satisfied with your clay model, use it to draw your carving plans, and keep it on hand as a reference as you carve.
You need to cover the dummy's torso with clothing, rather than carve the clothing onto the dummy, because the chest area is really only a curved, hollow front panel. Create a strong shoulder area upon which to attach the arms, and make sure you've got a sturdy, heavy, flat base at the torso bottom so that the dummy can sit securely and balance easily when it "sits." The back of the torso contains the puppet stick controls and hides your hand as you operate them: Allow lots of space for this within the chest.
The arms and legs, whether you choose to make them from carved wood or stuffed fabric, must be heavy enough so that the limbs hang naturally down from the shoulder or hip. Make sure they can move as real arms and legs would: Even though the dummy won't have legs or arms that will move on demand, they will swing and sway as the operator moves, and you want those movements to look as natural as possible.
You can carve the hands and shoes, if you are skilled, or you can stuff gloves for the hands. Purchased doll hands and feet or shoes are also an option.