You could define it either way you want - it's your block exchange - but you will have a tough time finding any directions for a 12" unfinished block, which would be 11.5" finished. You could draft one, but the patch sizes would probably be strange. For example, if you wanted a simple 9 patch to wind up as 11.5" finished, your patches would each measure 4.3333333 inches. That's just not as easy as making 4.5" patches!