Has Pellegrini taken City as far as he can?

Pellegrini is a blessed manager, he has a virtually limitless budget with which to express his ideas. Yet, 3 years down the road, his Man City team are very lackluster. No one quite expected them to beat Barca, but the manner in which they lost was completely unacceptable, and that is down to the coach. Likewise in the league they have not only squandered every opportunity they've had to close the gaps but if they continue at this pace a top 4 finish is not guaranteed. His talent lies on building good teams and playing attractive football, but lately he has gone for players that lack technique and he has not demonstrated a tactical acumen for big games required of top coaches. This last point is most noticeable in the Champions League, where ironically he has done worse with the two big budget teams he has coached (City and Real) than with the two underdogs (Malaga and Villareal).