Like always, IT DEPENDS Just google around, see what game developers blog about and get inspired. Just today for example:* Blur showed some of their deformation debugging stuff http://www.gametrailers.com/video/bizarre-creations-blur/62635 (1:10 for example, they seem to use some kind of array of dots or sphere volumes to…
renderhjs is mostly right, but you can go for the most common kind of thing. Usually that is creating two models, by taking the undamaged one once it's all finished and morphing it into a damaged state. Then take the textures and change them to fit the modeled damage. Seperate parts can be created that can detach and so,…