A method of estimating quality parameters for a plurality of engine components of a gas turbine engine is provided. The engine components have at least one sensor responsive to the engine component operation. The method includes providing an engine model having virtual sensor values and quality parameters corresponding to the plurality of sensors of the engine components; comparing the virtual sensor values to actual sensor values of the plurality of sensors of the engine components to determine the difference between the actual and virtual sensor values; amplifying the difference by a predetermined gain; generating a plurality of quality parameter deltas in response to the sensed difference; iteratively updating the embedded engine model by inputting a predetermined portion of the generated quality parameter deltas into the embedded engine model; adjusting the embedded engine model for engine operating conditions; and recalculating the virtual sensor values.