It's always a best practice to pull the entire TS3 user game folder out of Documents to the Desktop before installing a new EP or patch, although not everyone remembers to do this, and test the new EP on the clean game folder, new game save just to make it's working as it should. Then put the original game folder with mods, saves, content, and everything else back in place. There is no need to delete anything except caches.
As for updating the game, that depends on which patch you are on now and how Ambitions was purchased/is to be installed. If disc or if this is the Mac version of the game, and you have EPs up through ITF, then you were on at least Patch 1.63 already. It would be recommended generally to patch up to 1.67. If this is an Origin install, you will be on Patch 1.69 whether you want it or not. If Steam, then 1.67, again no choices given.
But Ambitions alone does not raise the patch level of the game if you are already beyond that, the patch that one "came with" was 1.12 long ago and you would already be way past that. As for mods, they should always be compatible with the patch level you are actually playing. Those that are still in development, such as NRaas mods but from other developers as well, should always be maintained at the most recent versions if you are playing on Patch 1.67/69.