The following are the 5 real-world examples demonstrating the impact of inadequate attention to requirements engineering (RE) on system development time and costs.
In 4th June 1996, European Space Agency’s Ariane 5 rocket, which was to deliver payloads into earth’s lower orbit, exploded after 37 seconds of flight, causing an approximate loss of $0.37 billion (Lann, 1996, p. 3). The failure was caused by an unhandled error while converting data from 64-bit floating point number to 16-bit signed integer (Lann, 1996, p. 9) format. Later investigations found that the major cause of this error condition could be attributed to inadequacies in software specification and design because of incorrect analysis of changing requirements (Nuseibeh, 1997, para 5) aka inadequate RE.
Ariane 4 software was retrofitted to work with Ariane 5 which had quite a few design differences with the former model and those were not taken into consideration properly (Lann, 1996, p. 9).
Scrapping of Baggage Handling System of Denver Airport. The plan was to come up with a fully-automated baggage handling system for the Denver airport, thereby drastically minimizing manual intervention in the process, but the project initially went 16 months over schedule with a cost-overrun of about $560 million (Coolman, 2014).
Then, because of the system’s inability to fulfill the project goals, imposition of a fine of $12,000 per day by the city of Denver, and incurring a maintenance cost of $1 million per month, the project ultimately got scrapped by its sponsor United Airlines after approximately 10 years (CCL, 2008, p.
2). It has been observed that the key root causes of this catastrophic failure are underestimation of system complexity and agreeing to an impractical project schedule of 2 years (CCL, 2008, p.3), both of which can be attributed to inadequate RE. Because of huge schedule pressure, many shortcuts were taken which cascaded into multiple problems (CCL, 2008, p.3).
In September 2011, the UK National Health Services (NHS) announced the scrapping of its mega-scale electronic health-records program after facing major delays, implementation problems, and incurring an expense of 12.7 billion (Charette, 2011), which was way above the original estimate of 6 billion (Campion-Awwad et al, 2014, p. 3). It was observed that one of the key reasons for the failure was inadequate involvement of important stakeholders because of impractical time schedule and haste on the government side, which resulted in poor understanding of confidentiality issues (Campion-Awwad et al, 2014, p. 12).
Because of poor stakeholder involvement this is also a case of inadequate RE.Failure of J.C. Penny’s Nationwide Pricing Strategy. In 2012 the new CEO of the retailer J.C. Penny, which was experiencing an abysmal performance, announced a new pricing strategy by replacing the earlier discount/coupon based fake price models with simpler realistic pricing models (Tuttle, 2013) and foregoing discount coupons altogether. This new model however, had to be scrapped, because it failed to attract shoppers and resulted in a huge drop of sales by 32% causing the company to lose $985 million in revenue and 60% drop in its share prices (Braun, 2014, p. 3). The root cause of this failure is that the model ignored the fact that buyers in fact get quite attracted by bargains/deals irrespective of the price points (Braun, 2014, p. 6). This demonstrates that there was a lack of understanding of the customer base i.e. inadequate stakeholder analysis and hence inadequate SE.
SNCF’s New Trains Wider Than Stations. In 2014 the French railway company Society Nationale des Chemins de fer Franais (SNCF) found after purchasing 2,000 new trains (BBC, 2014) that they are much wider and higher than what many of the railway stations would be capable to accommodate, thereby resulting in a loss of almost 15 billion so far (IMD, 2016). They are trying to reconfigure the stations to accommodate the new trains at a cost of 50 million so far. The root cause is that it was assumed that since the stations built in the last 30 years have the same dimensions, the same will be true for the stations built before. Hence the rail operating company RFF gave wrong dimensions to SNCF and the discrepancy in information was only discovered at a much later stage when the trains were ready (BBC, 2014). Since this is an example of bad assumptions and poor attention to detail, this is a clear case of inadequate RE.