Which ways of understanding are fine?

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"It is all because of the people making the noise." I know the structue of this sentence looks so easy but I have some trouble analyzing "the people making the nosie" because I think that we can understand it in two different ways. For example, the people (that are) making the noise or (the people /the people's) making the noise are both are possible under different contexts. What do native English speakers think about it and could you tell me  how to understand sentences like that? Thank you so much and I can't wait to hear from you. 

edited Aug 16 '12 at 07:17 Hans Contributor

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