Option 1 -> "blow up" means to explode or become angry, doesn't fit the context of accepting a project.
Option 2 -> "take on" means to accept or undertake a task/challenge, fits perfectly with the context.
Option 3 -> "call out" means to challenge or criticize someone publicly, doesn't fit here.
Option 4 -> "put in" means to insert or devote effort, but you don't "put in" a project as a challenge.
Hence, Option 2: take on -> "Take on" is the correct phrasal verb meaning to accept or undertake a responsibility, task, or challenge, which perfectly fits the manager's request for employees to approach the new project as a challenge -> correct