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The gas turbine was one of the most important technological developments of the early 20th century, and it has had a significant impact on our lives. Although some researchers have worked on predicting the performance of three-shaft gas turbines, the effects of the deteriorated components on other primary components and of the physical faults on the component measurement parameters when considering the variable inlet guide valve scheduling and secondary air system for three-shaft gas turbine engines have remained unexplored. In this paper, design point and off-design performance models for a three-shaft gas turbine were developed and validated using the GasTurb 13 commercial software. Since the input data were limited, some engineering judgment and optimization processes were applied. Later, the developed models were validated using the engine manufacturer's data. Right after the validation, using the component health parameters, the physical faults were implanted into the non-linear steady-state model to investigate the performance of the gas turbine during deterioration conditions. The effects of common faults, namely fouling and erosion in primary components of the case study engine, were simulated during full-load operation. The fault simulation results demonstrated that as the severity of the fault increases, the component performance parameters and measurement parameters deviated linearly from the clean state. Furthermore, the sensitivity of the measurement parameters to the fault location and type were discussed, and as a result they can be used to determine the location and kind of fault during the development of a diagnosis model.