The planning fallacy is the systematic tendency to underestimate time, costs, and risks while overestimating benefits, affecting over 85% of projects across all industries. Flyvbjerg's analysis of thousands of projects shows that optimism bias and strategic misrepresentation together cause average cost overruns of 28% in IT and 45% in infrastructure. Reference class forecasting, which bases estimates on outcomes of similar past projects rather than inside-view planning, reduces overruns by 50% or more.