In this report we present a participatory design approach to the development of a VE, with an iterative, user-informed process throughout the entire design and development cycle. A preliminary survey was first undertaken with end-users, i.e., architects, chief engineers and decision makers of a real-world urban planning project, followed by a study of the traditional workflow employed. We then determined the elements required to make the VE useful in the real-world setting, choosing appropriate elements (image-based textures for facades, realistic vegetation, shadows, 3D sound and crowds) to develop a rich and audiovisually realistic VE. Our participatory design approach guided the development of an appropriate interface and an evaluation methodology to test the overall usability of the system. The VE was evaluated both in the laboratory and in the users' natural work environments. The results suggest that participatory design can help ensure that the VE will meet the practical needs of its end-users; that appropriately chosen multiple views of the scene are useful in urban planning, and that the realism enhancements introduced increase the effectiveness of VEs for the chosen context.