This paper describes a new fast Reverse Engineering (RE) method for creating a 3D computerized model from an unorganized cloud of points. The proposed method is derived directly from the problems and difficulties currently associated with remote design over the Internet, such as accuracy, transmission time and representation at different levels of abstraction. With the proposed method, 3D models suitable for distributed design systems can be reconstructed in real time. The mesh reconstruction approach is based on aggregating very large scale 3D scanned data into a Hierarchical Space Decomposition Model (HSDM), realized by the Octree data structure. Then, a Connectivity Graph (CG) is extracted and filled with facets. The HSDM can represent both the boundary surface and the interior volume of an object. Based on the proposed volumetric model, the surface reconstruction process becomes robust and stable with respect to sampling noise. Moreover, the data received from different surface/volume sampling devices can be handled naturally. The hierarchical structure of the proposed volumetric model enables data reduction, while preserving significant geometrical features and object topology. As a result, reconstruction and transmission over the network are efficient. Furthermore, the hierarchical representation provides a capability for extracting models at desired levels of detail, thus enabling designers to collaborate at any product development stage: draft or detailed design.