It is supposed to determine the optominal performance of the boat in a given configuration. PHRF is inexpensive and it suits the large majority of recreational sailors in most areas. It is not supposed to take into account the ability of the skipper and the crew. Unfortunately this is often not what happens especially in the case of a one off yacht or a very hot class yacht. Most other Handicap Rules are measurement based which means that the performance of the yacht cannot change it's handicap.
All systems have their good and bad points as do the yachts they handicap.
There has never been a rule that works for all yachts of all types and nor will there ever be one. It is also difficult to have a handicap that takes into account every angle of sail. Most handicap rules work best on courses with an even amount of upwind and downwind legs. The amount of wind also plays a big difference in how a yacht with a single handicap will perform. View the table above for more on this.