Hi Stefan,
That worked like a charm!!! Thank you very much. 
I added:
include “directory:project1”
include “directory1:directory2:project2”
In order to get the dependencies working I had to change from this:
compile project(‘:directory/project’)
to this:
compile project(path: ‘:directory:project’)
Originally I tried without the colon in front of the ‘directory’ but that did not work. I also had to add ‘path:’.
I am a gradle novice so this has been a bit of trial and error. Thanks to your advice I hope I am now moving in the right direction (please let me know if the way I am expressing the dependencies is wrong as I don’t really understand the difference with and without ‘path:’).
Cheers,
Stuart