Lack of direct communication: There may be times when the functional head would ask the employees under him to deliver a particular work when as the priority for the project manager would be different from that of the functional manager. If there is an urgency of some project, then project manager might ask other functional teams to leave their piece of schedule work and help the other functional units complete the task which forms the part of the project to be delivered urgently. In this scenario, the employees lack of direct communication as they would then be reporting to the other functional head till the task is completed. This results in conflict since the employees do not know whom to actually report.
Lack of ownership: Each functional unit is responsible for the completion of a part of the whole project. Thus they are not the employees do not identify with the project. They do not have the broader picture in mind. The project manager is always able to assess the importance of the completion of a project but it is difficult for the employees to understand the same. Hence this results in a conflict.
Opposing Interests: There might be situations when the employee is more interested in fulfilling his own personal goals rather than working towards achieving organizational goals. The employee pays more attention on his development rather than the completion of the project. The employee puts his personal interests before the organizational goals. This results in a situation of opposing interest and the employee ends up working for his goals without thinking about the destiny of the project. This is the worst situation for any project manager as it affects the overall delivery of the project.