Use lard, it's better than vegetable shortening or butter for texture. For the best combination of texture and taste, use lard and butter in equal proportions.
If you cut the fat into the dough with your hands, you can get flatter pieces. If you use a pastry cutter, the fat will retain more integrity. Both go towards "flaky" (as opposed to "crumbly") pastry. I prefer to use a pastry cutter and get the flattening during the rolling process.
When you cut the fat into the flour, you want largish pieces of fat. That is, when you bring the dough together into a ball (then press it into a disk), pieces of fat should be visible. Some recipes for pastry crust call for cutting the fat in until the dough has the consistency of "corn meal." That's NOT what you want. "Pea" sized pieces are the minimum for flaky pastry. I leave mine bigger.
You're still using too much water. When you add water, use barely enough ICE water to bring about 90% of the dough together. Turn it into a large piece of plastic cling wrap (e.g., Saran Wrap). Use the cling film to wrap the dough and form a ball. Then, press the dough into a thick disk on the counter. Put it in the refrigerator for at least 30 minutes to rest before dividing and rolling out.
The less water, the more tender. The colder, the more tender and the less shrink prone.
Pie crust wants minimal handling, but it's not biscuit dough and doesn't need to be handled very gently.
You're making things very difficult for yourself by not reading a good recipe. This is part of a very techinque oriented recipe I wrote awhile ago and posted on CT. If you want to read all the varitations they're here.
PIE CRUST RECIPE, THEME AND VARIATIONS
Lard is best for flakiness. Butter adds flavor and tenderness. Good vegetable shortening makes for forgiving handling. Good vegetable shortening is not the same easy proposition it once was.
Well chilled ingredients contribute to a flaky crust.
There are a lot of recipes for pie crust, or maybe I should write, "recipes" in quotes. Most are very slight variations on a simple set of proportions. I.e., For each cup of flour, figure: More than a third but less than a half cup (in other words, 6 or 7 tablespoons) of lard and/or butter and/or shortening; 1/2 teaspoon of salt; and no more than 2 tbs ice water.
From the simplicity of the ingredient list you see the real distinction in crusts comes from technique. Personally, I blend a little French pate brisee technique along with good ol' American and the miracle of modern refrigeration. Leaving us with:
MEDITATIONS ON A THEME
FLAKY PIE CRUST RECIPE AND VARIATIONS
(Two 9" pies or top and bottom for a two crust pie)
2-1/2 cups AP flour
2 tsp salt
1cup, plus 2 tbs ice cold lard; or 1 cup lard, plus 2 tbs butter.
Ice water as necessary
Mix the flour and salt in a mixing bowl. Set them, bowl and all, in the freezer to chill. Measure the lard, break it into small pieces and set it into the freezer to chill.
Remove the flour and lard from the refrigerator. Cut the lard into the flour using a pastry cutter or rub it in with your fingers. Most recipes specify that the lard should be cut in well enough so the mixture looks like corn meal -- this results in a crumbly rather than flaky crust. Instead, allow for a little inconsistency in the texture and cut in the lard just until it picks up all the loose flour.
Cover the bowl with cling wrap and return to the freezer for 10 minutes to chill.
Meanwhile prepare a glass of ice water.
Remove the flour from freezer. Add about 1-1/2 tbs of ice water. Form the fingers of one hand into a curved paddle and use them to mix the water into the flour until it forms a dry dough. Add more water if necessary, but as little as possible. You'll probably want another 1 or 2 tsps. Be careful not to overmix. If the dough leaves a little flour unincorporated, that's fine. Don't worry, final mixing will come later.
Turn the dough and any excess flour out onto a piece of cling wrap. Use the wrap to form it into a ball. Wrap it tightly, and put it into the refrigerator for ten minutes.
The extra mixing I told you about is a French technique called fraisage. While it's not typical of American pie making, it's makes a positive contribution to texture. On the other hand, you can omit it without losing too much by mixing the dough slightly more thoroughly to begin with.
If you're doing the fraisage, remove the dough from the refrigerator and cling wrap, turning it out onto a lightly floured board. Using the heel of your hand, flatten the ball into a disc. Again, using the heel of your hand (not the palm) knead it very gently, seven or eight times. If you don't knead gently, you will surely make the dough tough; if you use your palms instad of the heels of your hands, you'll warm the dough too much -- making it less flaky If you over knead, western civilization as we know it will end. Stop kneading at once if and when the dough starts to feel flexible or appears shiny.
Divide the dough into two equal pieces. Wrap each in cling wrap and press into a disk. Return to the refrigerator for at least thirty minutes.
If necessary, lightly flour your board. Turn one disk out onto it. Using a floured (and preferably chilled) pin, press an X -- not too gently -- across the entire diameter of the disk. It will help in rolling the dough into a more or less symmetrical circle of even thickness. To roll out, roll from the center of the disk (and X), turning the dough as necessary to make sure the dough doesn't stick to the board and to keep the circle even. Roll out until the circle is 10" in diameter, or very slightly more. You can measure by turning the pie pan over and checking its top against the dough As with almost every part of pastry dough making, work as gently and as quickly as you can.
With the top crust formed on the board, pick it up by gently rolling it onto your pin, starting on the edge nearest you and rolling it on away from your body . Leave some slack so the rolls drape loosely on the pin. Then, carefully lift the pin over the pie pan, and starting just behind (about 1/2") it, so you drape a bit of dough over the back of the pan, unroll the dough towards you. This should center the dough perfectly in the pan. The whole rolling, lifting and unrolling the dough will stretch the dough enough that it should leave a drape all around the edges of the pan.
While this sequence of "towards" and "away" isn't necessarily critical, it's most comfortable for nearly everyone and a good habit to develop.
Using your finger tips very gently push the dough into the seam where the bottom of the pan meets the edge -- as and if necessary.
(For a two crust pie: Fill the bottom crust, then form the top crust; carry it to the pie; and unroll it in the same way.)
Form or crimp your edges in the usual way. Be aware a lard or lard and butter crust will not allow the same crisp crimping as shortening or shortening and butter.
For an extra flaky and crisp crust, change the flour amount to 2 cups AP flour; 1 cup cake flour, less two tbs; and 2 tbs whole wheat flour. The flours play against one another in that the cake flour adds some tenderness and the wheat flour some crispness.
But what makes this variation worthwhile isn't the ingredients, it's the flakiness engendered by technique.
Instead of cutting the lard into the flour, roll it in as follows. Use a small melon baller to cut the lard and butter into small pieces -- or semi-freeze the fats and use a knife. Put the pieces with the dry ingredients in a gallon size plastic bag, and shake to make sure each piece is well coated with flour. Sometimes that means allowing the bag to sit on the counter for a few minutes first so the fats are warm enough that the flour will stick. Afterwards, if necessary return to the freezer until the fats are again semi-frozen.
Remove the bag, make sure it's completely closed, then either open one corner very slightly or pierce the top with a needle to allow air to escape. Then use your rolling pin to roll the fats into the dough. You'll see large flakes develop as you roll. Rotate the bag, and turn it over as you go to make sure the pressure is applied evenly. Shake occasionally to keep the loose flour distributed evenly. After a few minutes there won't be any more loose flour, and all of the butter and lard will have been pressed into very thin flakes. Chill again, then add water and form a dough as before.
Hope this helps,