OP, I think we all understand the unreasonableness that comes with a lack of sleep and, if you suffer with other medical issues as well (e.g. anxiety) then this can feel even worse. By 12 weeks I am guessing you are now in full on melt down that this behaviour will be forever. For me, it was this fear that was the worst aspect - always thinking "what if the dog does THIS (whatever he was doing at the time) for the rest of his life"
It won't.
It passes.
Calm consistency is what the puppy needs. He needs to be able to rely on exactly what will happen when he does x, y, z.
I personally found having him in my room worked best but if you want to keep him downstairs and are already sleeping on the sofa then follow a routine from there.
I am not totally clear when yours is causing 2 hours of hell - when he first goes to bed or in the middle of the night but I guess the approach is the same regardless.
Give him a nighttime routine so he can learn it is time for bed. I would recommend keeping it at approx. the same time every night - just at first. For me, we did the following at 10pm every night:
- turned the TV off
- all got up
- did a little tidying up in the kitchen
- let him out for a wee
- brought him back and took him to bed
None of this involved excitable actions so no playing, making excited noises, or anything energetic. He soon learned all of this happened immediately before bedtime. Dogs are pretty good at staying with a routine once they have worked it out.
I then took him into my room and let him have a little potter about while I brushed my teeth etc. I have an en suite so could still keep an eye on him.
I then popped him into his crate For the first few nights I then sat down immediately outside the crate with my fingers stroking him through the bars and gently spoke soft words, repeating the phrase "settle down" often. This helped him settle down and allow himself to feel sleepy because I was right there with him. Once he started to dose off I would slowly move away. The first night or two this crate had to be right by my bed and I had to have my arm down by the crate door - it took me half an hour or more to move from that crate to my bed and I kept talking "settle down" all that time until we both fell asleep. Using the phrase really helped later because he's accidentally learned what settle down meant.
If he cried in the night I got up and without speaking or interacting at all I carried him into the garden, popped him down and told he to "go wee". Once he wee'd I took him back to his crate.
I repeated that every time he cried at night but he never got anything else from me than a trip to the garden. Not a stroke, not eye contact, not a cuddle. Nothing. He was good about not running off into the garden but if he'd tried that I would have clipped a lead on him to take him out.
The first week or so he woke me 3 times a night. The next week it was twice a night, following week was once a night and then we started to go through the night without waking.
Once he got to the point of going into the crate without fuss I started to move it away from the bed. I did this LITERALLY one inch at a time. Each day I would move the crate back by an inch until it was eventually the other side of the room from me. Battendog sleeps in the same room as me but otherwise I would have moved it slowly out the bedroom door and across the landing.
Perhaps you could do something similar? Crate him right by the sofa and slowly move the crate away from you and into the kitchen - at which point you might be ok to quietly shift from the sofa to your own bed again.
All that said,
Bitey is absolutely right that all dogs and homes are different so you must work within your own set up. My dog took about 4 weeks to go through the night but he could have taken 1 week or 10 weeks - both would be "normal". You have to work with the dog you have.
There was a thread a few months ago with an Old English Sheepdog (I think) that was having a very similar issue to you. Might be worth looking it up for a read because with mn advice (tweaking to suit the OP and her dog) and a consistent approach they made great improvements within quite a short space of time.