Microsoft Project and Project Server can absolutely be used to perform Earned Value Management (EVM)… provided that you have a few key things in place:
You need to build a project schedule with work estimates and resources assigned to each task in the schedule.
You need to assign hourly rates to each resource (a blended rate will work).
You need to baseline the project schedule when planning is completed, but before execution has begun.
You need to regularly update the progress on the tasks in the project schedule (tracking actual work hours is most accurate) and set the project ‘Status Date’ each time the schedule is updated.
If all of these things are properly put into place, then Microsoft Project will automatically calculate many built-in Earned Value fields for you. Then it’s simply a matter of extracting the reports that you need, which can be done via Microsoft Project or Project Server.
Please let us know if you have any more detailed questions.