“When we set children against one another in contests – from spelling bees to awards assemblies to science “fairs” (that are really contests), from dodge ball to honor rolls to prizes for the best painting or the most books read – we teach them to confuse excellence with winning, as if the only way to do something well is to outdo others. We encourage them to measure their own value in terms of how many people they’ve beaten, which is not exactly a path to mental health. We invite them to see their peers not as potential friends or collaborators but as obstacles to their own success. (Quite predictably, researchers have found that the results of competition often include aggression, cheating, envy of winners, contempt for losers, and a suspicious posture toward just about everyone.) Finally, we lead children to regard whatever they’re doing as a means to an end: The point isn’t to paint or read or design a science experiment, but to win. The act of painting, reading, or designing is thereby devalued in the child’s mind.“
Alfie Kohn, The Myth of the Spoiled Child, Chapter 4
little thoughts 
Many children do, however, enjoy the potential of a reward/award, so would a better approach be the opportunity for recognition or an unspecified number of “excellence awards?” Such a system would be more focused on the accomplishment of each kid and each effort instead of someone’s performance as compared to another’s. And competition, which some kids to crave, would be left in spheres intrinsically designed as such—like sports—instead of bleeding into areas never meant to be a contest.
Alfie Kohn’s overall premise, discussed more in his other books, is that children are conditioned to like praise and the praise ends up diminishing their intrinsic motivation and replacing it with the extrinsic motivation of earning awards and praise. So from his perspective I guess the reply would be that excellence awards aren’t a great solution. Maybe just the opportunity to interact with adults in the sphere of interest – so for example to get to present and discuss one’s science experiment with a scientist – would be a fulfilling way to conclude a big project. I totally agree that competition can be fun in the right sphere though, like board games and sports… the danger with it is when kids start to depend on winning for their sense of self worth, which I think can be a reason some kids do seem to crave it.
That makes sense. I suppose opportunities for recognition (like getting to discuss one’s science project with a scientist) getting replaced with simple praise and awards is a symptom of laziness on the part of those entrusted with the role of educating. It’s more effort cultivate and encourage kids to focus on goals tied to what they’re learning vs. simple rewards.