Increasing urbanization and car ownership rates in developed countries result in hyper-congested cities with long delays in everyday commutes. Since scarcity of space forbids road space expansion, increasing the effectiveness and attractiveness of mass transit seems as a viable way to increase the systems supply. Dedicated Bus Lanes (DBL) provide exclusive space for public transit vehicles and therefore reduce mean travel time as also the congestion-related travel time variance; however, they decrease road capacity for regular traffic that may lead to severe congestion propagation due to the spillback effect. In this work, Variable Neighborhood Search is applied to seek for the optimal DBL plan in terms of total passenger hours travelled. A queueing theory based traffic flow model with proper treatment of spill-backs and traffic signal settings called "Store-and-Forward" is extended to simulate the evolution of traffic congestion in the network. The evaluation of the resulting optimal solution in comparison to state-of-practice solutions through microsimulation can reveal the degree of improvement in terms of decreasing total passenger delay
