I have done about 10 all grains batch sparged beers and here is what I have learned in the process. As a general rule you want to do 2 sparges and get about the same volume from both.
In the initial few batches you will learn about how your system works. You will need to know how much evaporation occurs during a one hour boil, you have to figure for grain absorbtion and dead space in your equipment. Your effeciency is usually not the best on the first try.
I don't think it would make a great deal of difference whether you use 1 or 1.25 quarts of water per gallon for your initial mash infusion. I use 1.2 quarts per pound. I have found that the grain absorbs roughly .12 quarts per pound. I have about a pint of dead space that will not drain no matter how high I tilt the cooler.I would also plan on a finished wort of 5.5 gallons which should yield a good 5 gallons of finished beer come bottling or kegging time.
Let's say you want 7 gallons of wort to boil.
1. 10.75 * 1.25 = 3.35 gallons of strike water.
2. The grain absorbs 10.75 * .12 = 1.3 gallons
3. 3.35-1.3 = 2.05 which means you will need to add 1.5 gallons of 185-190 degree water at the end of the 60 minute mash to yield 3.5 gallons for the first runnoff. This gets the grain temp up a bit. Stir thoroughly for 3-5 minutes and then begin the runoff. Make sure the runoff runs clear before you collect the wort in the kettle. Vorlauf it.
4. The second runoff is just 3.5 gallons to get to the 7 gallon mark. I usually have the water at around 185 degrees and stir thoroughly before the runoff.
Hope this helps and my math is right.