The cost of constructing a prison or jail facility is enormous and usually underestimated. Cost estimates for construction vary according to region, type of facility, program needs, and legal restrictions on the use of prison labor but, in their 1985 study of prison costs Charles H. Logan and Sharla P. Rausch cite a Department of Justice study which estimated that based on 1982 dollars, average per-bed construction costs in 1985 were $26,000, $46,000, and $58,000, for minimum, medium, and maximum security prisons respectively. [16] (Since actual expenditures are made at current prices rather than "real inflation-adjusted prices", translating these figures into current 1983 dollars would suggest that the above per-bed construction cost figures today would be closer to $31,000, $54,000, and $68,000 for minimum, medium, and maximum security facilities respectively.)

However large these cost estimates appear to be, the Department of Justice report makes it clear that, by virtue of traditional government budgeting and accounting practices, they do not include such considerations as land purchase, financing costs, cost overruns and hidden costs. With specific reference to financing costs, for example, if construction of a minimum security facility at current-dollar prices were financed by a 20-year bond at 10 percent interest, the real cost would be not $54,000 per bed but closer to $93,000 per bed.