There are basically 3 types of colony setups: 1)full blown outdoor things...fenced area, with "coops" for them to hide in, and feeders; 2)indoor colonies...like a horse stall where you put in a nest box setup, feeders, etc.; and 3)something that's a combination of 1 and 2.
A full blown setup either needs to be REALLY big, with your feeder at the center, or you need some way of keeping them from digging out. Most people will dig a fence of some sort up to 2feet down around the fence line. that keeps bun from digging out, and predators from digging in. (although a good hotwire running along the bottom of the fence will stop most predators)
A modified colony might be large pens set up in a portable garage structure, or a shed or even a barn. hmm. you could think of those as "chicken coop". A floor so they can't dig out, feeders and waterers. You just let the rabbits run in the pens. They will groom each other, play, generally have fun (it's fun to watch them develop friendships and personalities.) Again...you need to predator proof (barn cats, racoons, coyotes, etc.)
In an outdoor colony, you can leet them dig their own burrows to kindle in, or give them something like a big box (small unit they can use as a house) above ground, maybe a prebuilt tunnel made of ceramic pipe that goes into a cement "box" underground (that seems to work quite nicely). One person I remember had simple dug small holes about 6inches deep in the area he wanted the does to nest in. He said it worked like a charm.
A couple of things to know about colonies. The rabbits can go quite wild very quickly. there are people who have show rabbits in colony set ups tho. They just do a LOT more "hello bunny, come get the treat and be handled" than you would normally do with a caged bun.
whether to leave the buck in with the does depends on what you want. After a few months of being bred all the time, the does WILL get assertive and tell mr. buck "get lost". (well, most of them will) If there are a lot of does, Mr. Buck won't have time to go after everyone all the time. BUT...you can pretty much count on rabbit kits every month or 2. I keep my buck in a smaller pen right next to the does. he goes in with the does when I want kits, and stays with them until a couple days before kindling. They've always accepted him back into the colony without problems.
As Shara says, tho, don't try to put adult does into a colony unless they grew up together and bonded. (unless you have a REALLY big fenced in area where one can run and hide). Does are NOT friendly to other does. (or you're like Maggie and have magic bunnies. I swear..she has some of the nicest animals)