In this paper, some of the challenges of iterative development are described from a project manager's perspective. This document also discusses some of the common "traps" or pitfalls we've seen through our consulting experience, and from reports and war stories related by our colleagues
The waterfall model made it easy on the manager and difficult for the engineering team. Iterative development is much more aligned with how software engineers work, but at some cost in management complexity.
Although iterative development is more difficult than traditional approaches the first time you do it, there's a real long-term payoff. Once you understand how to do it well, you'll find you've become a much more capable manager, and you'll find it easier to manage larger, more complex projects. And once you get an entire team to understand and think iteratively, the method scales are much better than traditional approaches.