Watercolors can be used in a variety of ways in making portraits. They can be used to provide color to an ink drawing all the way to producing the completed portrait.
Woman in a Pink Hat
Gouache, colored pencil, graphite
How it was done - - After doing a preliminary sketch with a pencil, I decided that I wanted the picture to be in color. I then did the hair using various colored pencils. For the face, the shading under the hat and for the upper portion of the hat, I used gouache. The paper was just drawing paper but it handled the gouache without puckering or damage.
Art by Rich Wagner - Faces - Watercolor and gouache portraits - page two