Why is KuK army considered crappy in ww1?
British Propaganda? (Or Yugoslav, depending on where you get your information from. Might also be involving post-war nation building of the post war 'beak away' nations.)
More serious, A-H wasn't a first rate power, but neither was it that bad compared to some other powers involved in the war.
Things counting against the army?
Some serious strategic blunders on the highest levels of command - especially early on. Getting caught in an upgrade cycle (or more correctly, complex politics preventing the necessary funds from going to the army that it would have needed to complete them in adequate time). Complex command lines due to in fact being more like three armies in a trench coat instead of one unified army. Serious problems due to loosing too many multi-lingual officers and NCOs in the first months of the war.
Later on in the war large problems become apparent from the logistical and geographical situation. Enemies on three sides, most battles going on beyond the mountain range from the industrial and agricultural heartland with limited supply lines that became more and more worn with each month. Also: no easy access to a third party "neutral" power willing to provide supplies for cash - no Switzerland doesn't count. And a lack of shipping to facilitate such overseas purchases (and the Navy to protect them), again, mostly for geographical reasons.
Then there were contributing factors - such as not having fought a (serious) conflict since 1866. Or the fact that after the war no government remained that was interested in keeping up a positive narrative.
Still, they held their own against the Italians. They mostly kept up against the Russians after the initial disastrous 1914 performance - often outnumbered 2:1. (To be honest under an unified, German led, command.) Serbia was probably ground down more slowly than it could have been - but even at nearly 1:1 numbers of men fighting on the front they were ground down after ~16 months. (Serbia had some serious mobilisation numbers from the get go - and paid for it in probably the worst military casualties compared to overall population.)
So to conclude: There were some serious problems with the armed forces of A-H. But at the same time, they held together for four yours fighting on three fronts. Especially if one considers that pre-war army size and budget wise Italy alone was more or less the closest peer power to them, not taking into account Serbia, Russia, or the logistical, industrial and military contributions of Britain, France and the US.
(All this going from memory - take with a grain of salt, double check and all that...)