Since the finished square will be 2.75", 3x12 squares will end up at 8.25" x 33", adding the seam allowance it will be 8.75" x 33.5". However, since you are not making the squares, you can make the runner any size you want. It is only the center panel with 2 borders. The scalloping makes the whole thing. So, just subtract the borders from the finished size you want (10.5" subtracted from both the width and length) and work it from there ( be sure to add the seam allowance to the center panel after you subtract).
Ann