Hi Moeen,
The application is divided into several models, like you found out. It needs to have a reference to all models which is used in your customization. If not, you will indeed get this error until all models are referenced.
When it is really an extension, instead of a customization model, and you have only one report (multiple related objects) in it, the compilation time should not be that much. Before you start a build, you can try to end the xppcAgent service from the Task manager to see if this would lead to a better performance.