Carefully break apart and remove the deteriorated sections of the chimney cap using a stone chisel and hammer.
Mix a batch of latex-fortified mortar. Trowel an even layer of mortar all the way around the chimney cap, following the slope of the existing cap. Mortar should cover the chimney from the outside edges of the chimney bricks to the flue. Smooth out the mortar with a wood float, trying to recreate the original slope of the chimney cap. Inspect the mortar annually.
Measure the chimney and the chimney flue and build a form from 1/2 and %" plywood (form dimensions on opposite page, top). Attach the form to a plywood base using VA" wood screws. Glue %" dowels to the base, 1" inside the form. The dowels will cast a drip edge into the cap. Coat the inside of the form with vegetable oil or a commercial release agent.
Prepare a stiff (dry) mixture of mortar to cast the cap—for
Average-sized chimneys, two 60-lb. bags of dry mix should yield enough mortar. Fill the form with mortar. Rest a wood float across the edges of the form and smooth the mortar.
Keep angles sharp at the corners. Let the cap cure for at least a week, and then carefully disassemble the form.
Chip off the old mortar cap completely, and clean the top of the chimney with a wire brush. With a helper, transport the chimney cap onto the roof and set it directly onto the chimney, centered so the overhang is equal on all sides. For the new cap to function properly, do not bond it to the chimney or the flue.
Shift the cap so the gap next to the flue is even on all sides, and then fill in the gap with fire-rated rope or mineral wool. Caulk over the fill material with a very heavy bead of fire-rated silicone caulk. Also caulk the joint at the underside of the cap. Inspect caulk every other year and refresh as needed.