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I have an existing concrete shed base which is a bit cracked (due to a nearby tree) but generally OK. I'm planning to replace my 10x6 shed with a 10x14 one which will mean extending the concrete base.

My plan was originally to dig the new area and fill with hardcore (up to the same level as the existing concrete) and then lay new cement (with a DPM) on top which would be 4" high from the existing base.

However, I've been told that laying cement on existing is a bad idea as moisture could get in and blow the new concrete, and that I should instead break up the existing concrete before laying the new cement on top.

Is that true? What are my options?

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In your situation adding a new slab over the old has more chance for failure then success.

Overlay slab might help underlying nonmoving cracks, but will not prevent active cracks in the existing slab from reflecting through.

With a tree root causing the existing cracks the root growth will reflect into new slab if not fixed first.

Adding welded wire or rebar should be added to the overlay to help reduce cracks reflecting through.

Better slope drainage is needed to keep moisture flowing away.

One large issue is the expanded section of the new slab being partly on a different base material. Compacted underlayment will hot have the same settling and expansion/contraction as the existing concrete slab. This would become a prime area for breakage.

The better approach is to break up the existing slab. This material can usually be taken to a local sand and gravel pit for crushing and reuse as base material. Once it is removed treat the tree root issue.
Lay base material, compact and pour a new slab.

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I would drill holes and epoxy rebar in to tie the new concrete to the old part of the foundation.

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