Hi elliot521,
Thanks for playing Prison Architect and contributing to our community!
With regards to the fences, this is intentional. We would have to destroy the fences before being able to construct a wall in it's place. This could potentially lead to large openings that your prisoners could use to escape. Keeping the fence in this instance is the safer option.
My advice would be to expand your fence border first, then destroy the old fences before any construction takes place.
Hope this sheds some light on the issue and I hope you keep enjoying Prison Architect!
Tom