Developing a virtual reality application is a difficult task. For one thing, it requires an in-depth knowledge and understanding in many different disciplines. However, the most difficult part lies in the effective management of simultaneous design of form, function and behavior of virtual objects. Up to now, only little focus has been given to methods and tools for rapid prototyping VR software and modeling virtual objects. Most VR applications are developed by modeling the needed objects on conventional CAD systems first, then by programming their functions and behavior using low-level graphics libraries or high level simulation packages. In this paper, we advocate for a structural and pedagogical approach to developing VR applications, and add the component of "form" to an existing real-time system development methodology so that the resulting methodology (and the prototyping environment) supports simultaneous and hierarchical engineering of form, function and behavior. Using the proposed methodology and supporting tool, it is our hope that VR applications can be produced and maintained effectively.