A method for simulating a gas turbine including the steps of: sensing values of a plurality of first operating parameters of an actual gas turbine; applying the sensed values of the first operating parameters to a model of the gas turbine, wherein the model generates a plurality of predicted second operating parameters; determining difference values between the predicted second operating parameters and corresponding sensed second operating parameters of the actual gas turbine; modifying the difference values based on tuning factors generated by a Kalman filter gain matrix during operation of the gas turbine, and using the adjusted difference values to adjust the model of the gas turbine. The method may further comprise generating the tuning factors by applying to the model the sensed values of the plurality of first operating parameters and perturbated values of the adjusted different values to determine optimal tuning factors.