Obviously you are missing the encoder library. Have you tried to install it for your project? First you have to open the project “Flight Sim Throttle Quadrant”, then you have to go to the menu “Sketch” → “Include Library” → “Manage Libraries …”.
A window will open where you can search for the library you need. Enter “Encoder”, and several results will appear, some not relevant, since the search engine also searches the description of the libraries. You should see Paul Stoffregen’s “Encoder” library. Install the latest version which is 1.4.2. With that you would already have it and incorporated it into your project. If it still gives you problems in the compilation, I am afraid that the problem is already another.
