Games usually handle damage via hitpoints, or similar concepts. But my car does not explode if I kick it a thousand times – and neither should a spaceship. Those are sophisticated machines with many levels of redundancy built-in, so a critical failure should not be easy to accomplish. Then again, ships should get damaged.
I have opted for system-specific damage model. Each system on the ship tracks it’s own damage, will malfunction differently under specific conditions.
Take the K37 thruster. Rosatom-Antonov systems are pretty robust, but not indestructible. Abuse them long enough and they will give in.
K37 thrusters are susceptible to wear and direct impacts. Wear causes the valves to malfunction and thruster response becomes highly erratic. High energy impact leads to more direct damage – thruster assembly can bend out of alignment, and piloting becomes problematic.
There is still lot of tuning ahead to make the damage system both realistic and fun to play with. System-specific damage allows player to work around his ship problems in a rewarding way.