Categories and sub-categories are typically essential for any program. It allows applicants to compete for a particular prize, or with other applicants whose submissions fall within the same attributes. It is the same way boxers compete against other boxers within the same weight class.
For example, in an Associated Builders and Contractors program, you may have a category for Commercial buildings and another category for Federal Government / Military buildings. When an applicant is submitting a project for consideration, they only want to be compared against other projects that are of the same type.
Furthermore, it may not be fair for an applicant who only has a budget of $5M to compete against a project with a budget of $25M. This would be a good case for having sub-categories.
A more fleshed out example of category and sub-category structure is shown here.
We also recommend coming up with a three-letter representation for each category. For example, if Cars and Trucks were categories in our fictional awards program, we would create codes CAR and TRK respectively. For sub-categories, we can append 01, 02, 03, etc. See another example: