In my opinion:
A 12 inch "finished" block measures 12.5 inches before it's sewn to anything else.
A 12.5 inch "unfinshed" block will have 12 inches showing (finished size) after it's been incorporated into the item and all the seam allowances are 'used up'
Are you all making the same block? Were the instructions (and measurements) checked before making more than one block?
Some instructions are just plain wrong!