The issue is caused when QMM Project partition in ADLDS is attempted to be created using domain admin account. QMM machine is joined to the target domain as usual. However, when installation is initiated under the local machine admin account, it creates ADLDS Configuration partition, where only local account is having modification rights. And domain account are not having enough rights to create application (Project) ADLDS partition.
To resolve the issue, please do one of the following:
Using Server Manager, Roles and Features and remove ADLDS feature (all instances).
Login using target domain admin account and re-run QMM installation, which will install ADLDS with all necessary permissions properly.
Method 2 (where ADLDS already installed with local admin account):
Open ADSIEdit, select Connect. Select Configuration partition in the dropdown and "localhost" on the bottom (Computer).
Drill down to Roles, Administrators container, right-click and choose Properties.
Modify "member" value, adding domain account to it