Competition could be a race to the bottom, and often is. Competence, hard work, and intellect breed excellence.Competition breeds excellence. Handouts breed leeches.
I believe reputation could be a major factor in these projects, no matter how they are decided upon.
Two nearly identical feature proposals could be presented, one by Some New Guy for Cheap. And one by Udjin, for Expensive. I'll still vote for Udjin's project because I know he's worth it, some things are worth paying extra to get.