Tunnels can be found by searching Toilets, Cells, Cell Blocks, or by initiating "shakedown" from the "Emergencies" menu.
Dogs patroling the parimeter of your cellblock will also alert you to digging in that area with a brown "trowel" icon to indicate digging, dogs do raise false alarms when near machinery, so the best bet is to ignore any "digging" alerts during the day, and investigate ones at night, especially when clumped together.
Once you've searched the cell and uncovered the tunnel, select "Repair Tunnel" from the "Demolition" menu, the achievement will pop when all squares of the tunnel have been reapired.