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.
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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.
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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: