I haven't been on projects of this size, but with many of our customers a big issue is that the decisions are taken by people sufficiently high up in the organization that they don't know what's really going on, and without including key resources from lower levels to provide that insight.

In my experience it only takes one or two levels to get to that point.

Regarding the insane requirements, it's also my experience that a lot of companies think they're snowflakes, thinking they do something really special, when they're really just doing what everyone else is. For historical reasons they ended up doing it this way instead of that way and now they'd rather have the world change around them than change their ways.