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A system comprising determination of tuning parameters enabling optimal estimation of unmeasured engine outputs, e.g., thrust. The level of degradation of engine performance is generally described by unmeasurable health parameters related to each major engine component. Accurate thrust reconstruction depends upon knowledge of these health parameters, but there are usually too few sensors to estimate their values. A set of tuning parameters is determined which accounts for degradation by representing the overall effect of the larger set of health parameters as closely as possible in a least squares sense. The method utilizes the singular value decomposition of a matrix to generate a tuning parameter vector of low enough dimension that it can be estimated by a Kalman filter. Generation of a tuning vector specifically takes into account the variables of interest. The tuning parameters facilitate matching of both measured and unmeasured engine outputs, as well as state variables.