Accurate and reliable effort estimation is still one of the most challenging processes in software engineering. There have been numbers of attempts to develop cost estimation models. However, the evaluation of model accuracy and reliability of those models have gained interest in the last decade. A model can be finely tuned according to specific data, but the issue remains there is the selection of the most appropriate model. A model predictive accuracy is determined by the difference of the various accuracy measures. The one with minimum relative error is considered to be the best fit. The model predictive accuracy is needed to be statistically significant in order to be the best fit. This practice evolved into model evaluation. Models predictive accuracy indicators need to be statistically tested before taking a decision to use a model for estimation. The aim of this thesis is to statistically evaluate well known effort estimation models according to their predictive accuracy indicators using two new approaches; bootstrap confidence intervals and permutation tests. In this thesis, the significance of the difference between various accuracy indicators were empirically tested on the projects obtained from the International Software Benchmarking Standard Group (ISBSG) data set. We selected projects of Un-Adjusted Function Points (UFP) of quality A. Then, the techniques; Analysis Of Variance ANOVA and regression to form Least Square (LS) set and Estimation by Analogy (EbA) set were used. Step wise ANOVA was used to form parametric model. K-NN algorithm was employed in order to obtain analogue projects for effort estimation use in EbA. It was found that the estimation reliability increased with the pre-processing of the data statistically, moreover the significance of the accuracy indicators were not only tested statistically but also with the help of more complex inferential statistical methods. The decision of selecting non-parametric methodology (EbA) for generating project estimates in not by chance but statistically proved.