I worked on a project that was similar to what was described -- four of us all at different institutions, working on a single project.
The management mostly left us alone, and we got the project done. As we're in a more 'maintenance' phase now, we just have annual face-to-face meetings to hash out what we think needs to be done and how long it'd take to do it, and then we present it to the 'steering committee' (management / scientists who use the software) who decide what we should or shouldn't focus on for the next year.
For the most part, the software works because we figured out how to break it down into parts, what the APIs needed to be between the different parts, and then we coordinated between the programmers who was responsible for each parts.
After we were a couple of years into the project, we finally got it cleared through all of the institutions (some of us work for the government) to use IM ... so we just hang out in a channel to chat & let people know if we're seeing problems, making changes, etc.
Unfortunately, the project got a bit derailed a few years back, when the same group plus a few other people got stuck with maintenance of another project that was written by an outside group. (and we're not allowed to fork it) ... and we've wasted so much time on that second project that we don't have the time (or remaining brain cells) left to get much work done on the first one.
Anyway ... my point is -- if you have a good group of developers, you should be able to just point them in the right direction, and let them work ... don't try to 'manage' them any more than you have to.