The same problem I had encountered but I managed to solved it. Try adding 
classpath variable for your hibernate tools (e.g. <eclipse 
path>/plugins/org.hibernate.eclipse_3.1.0.beta3) because 
org.hibernate.cfg.DelegatingReverseEngineeringStrategy can be found on the jar 
file hibernate-tools.jar and your ide cant found it that's why you're receiving 
java.lang.ClassNotFoundException.

I hope that solves the problem ;)

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