Is there an alternative to traditional exams?
One alternative that's been gaining momentum in actual classroom use is standards-based grading (SBG): http://www.fwps.org/teaching/sbe/grading-system/ 

In SBG, the instructor establishes a list of milestones that students are expected to attain throughout the course. The students then can provide evidence of any sort -- within parameters set by the instructor -- that prove they have met the standard. Student evidence of attainment of a standard is marked on a scale usually from 0 to 4 (unacceptable, novice, progressing, acceptable, and mastery -- or something like this) and grades are assigned at the end of the semester based on how many of the milestones have been met at "Acceptable" level or above.  

For example, in calculus, one standard might be "Take the derivative of a second-degree polynomial using the limit definition". A student might show that they know this by doing a problem on a standard timed test. But maybe they don't have it down as well as they should, and on the test their work is marked as a 2 out of 4 (progressing; maybe they got the definition right but did some of the resulting algebra wrong). This isn't the end of the story. Later in the course, the student can show evidence again that they've learned what they need to learn -- for example, they can schedule time in office hours to come work a problem or two to show you they've met the standard. Or maybe take a short quiz in class, or work a problem during unstructured group work time in class meetings, or whatever avenue the instructor allows. 

The point of SBG is that we want to assess students based on what they know, and give them multiple ways to show that they know it. SBG can therefore be a superset of traditional timed testing -- students that do well in timed situations will do fine in SBG, but students who struggle with timed testing can have multiple chances to get their act together, and as long as they can prove they've mastered the material by the end of the course, that is what matters. 

I don't personally practice SBG but I would like to. I'd suggest this blog post by my colleague Jon Hasenbank who is a big SBG proponent: http://profjonh.blogspot.com/2014/02/sbg-mia14.html